r 


PACEMAKERS  IN  FARMERS'  CO-OPERAllON 


Benson  Y. 
Pref 

THE  purposes  of  this  study  are  to  give  a  comprehensive 
account  of  the  present  extent  of  farmers'  co-opera- 
tive enterprise,  to  explain  various  types  of  organi- 
zations and  the  methods  used;  to  tell  the  stories  of  successful 
and  typical  local  and  federated  co-operatives;  to  estimate 
the  full  significance  of  this  important  and  rapidly  growing 
movement.  It  includes  the  first  extensive  survey  of  local 
co-operatives,  covering  organizations  in  202  representative 
counties  in  forty-four  states.  It  is  a  narrative  of  some 
of  the  very  recent  efforts  as  well  as  of  older  tested  organi- 
zations. The  interest  is  solely  in  co-operation  among  farm- 
ers in  buying,  selling,  and  other  steps  in  the  distribution  of 
supplies  and  produce. 

The  author's  sources  have  been  personal  investigation  dur- 
ing the  past  two  years,  research  into  numerous  state  and 
national  agricultural  bulletins  and  journals,  correspondence 
with  organizations,  and  for  parts  two  and  four  of  Chapter 
II  data  gathered  on  rural  life,  including  farmers'  co-opera- 
tive organizations,  during  1920-21  by  the  Town  and  Country 
Department  of  the  Interchurch  World  Movement  and  of 
the  Committee  on  Social  and  Religious  Surveys.     This  last 


Landis 

II 

ace 


information,  secured  by  trained  field  workers,  or  by  volun- 
teer leaders  under  their  supervision,  covers  the  2,575  rural 
communities  in  202  counties  well  distributed  over  the  various 
regions.  They  were  selected  from  a  total  of  600  counties 
available,  so  as  to  get  a  fair  representation  from  all  dis- 
tricts. The  aim  was  to  get  as  near  as  possible  to  six  or  seven 
per  cent  of  the  total  number  of  counties  in  each  state. 

In  these  investigations  the  rural  community  has  been,  in 
a  majority  of  cases,  the  trade  area  of  the  village  or  town. 
Nearly  every  town  or  village  has  a  surrounding  farming 
population,  and  the  farmers  have  with  it  strong  ties  of  trade 
and  also  some  ties  in  social  and  recreational  life,  education 
and  religion.  In  some  sections  the  trade  area  does  not  in- 
fluence the  grouping  of  people  for  other  activities.  Then 
the  "social  community"  is  the  unit,  centering  around  some 
institution  or  organization  as  the  school,  lodge  or  church. 
Though  ordinarily  the  community  with  5,000  people  in  a 
town,  plus  the  surrounding  farmers,  is  the  largest  studied, 
this  limit  has  not  been  arbitrarily  applied.  The  smaller 
communities,  if  altogether  industrial,  have  been  excluded, 
while  the  larger,  if  altogether  rural,  have  been  surveyed. 


Foreword 


Warren  H.  Wilson 

THE  interest  in  agricultural  co-operation  among  min- 
isters of  religion,  school  men  and  women  and  the  pro- 
moters of  rural  health  and  rural  recreation  is  very 
definite.  The  reasons  for  this  interest  are  positive.  They 
constitute  a  conviction  so  strong  that  practically  all  the 
workers  on  behalf  of  an  ideal  country  life  are  advocates  of 
the  organization  of  country  people  in  co-operatives  for  buy- 
ing, selling,  credit,  manufacture  and  production.  That  is, 
better  business  thus  defined  is  regarded  as  essential  to  better 
living. 

The  first  reason  is  that  farming  is  a  deficit  occupation. 
Producing  the  major  portion  of  the  wealth  of  the  country, 
the  farmer  receives  a  minus  payment.  This  fact  is  now  a 
matter  of  record  verified  by  the  Universities,  undisputed 
among  economists.  Social  workers,  who  are  promoting  in- 
stitutions that  cost  money,  are  baffled  in  their  effort  to  per- 
suade the  heads  of  families  in  a  deficit  occupation  that  they 
ought  to  spend  more  money. 

The  second  reason  is  the  conviction  that  there  must  be  a 
distribution  of  wealth  among  farmers,  reasonably  adequate 
to  the  service  they  render  and  to  their  social  needs.  We  do 
not  see  any  other  economic  machinery  in  the  world  that  is 
capable  of  retaining  among  farmers  a  sufficient  share  of  the 
wealth  they  produce.  The  distribution  of  wealth  through  co- 
operation will,  we  believe,  avert  the  disguised  pauperism 
which  prevails,  unrecognized  and  unnamed  throughout  whole 
counties  and  indeed  in  some  entire  states.  In  these  counties 
and  states  farmers  give  no  encouragement  to  ministers,  health 
workers  and  school  administrators.  These  men  see  on  the 
economic  and  social  horizon  only  one  source  of  relief  from 
social  poverty.     That  alternative  is  economic  co-operation. 

Co-operation  will  stimulate  the  motives  which  will  make 
men  produce,  work  and  save.  The  country  demands  at  the 
present  time  a  better  performance  in  these  respects  than  the 
American  farmer  is  giving.  Social  workers  in  the  city  as  well 
as  the  country  will  welcome  vastly  increased  production.  It 
will  avert,  however,  lower  wages,  increase  our  national  pro- 
duction and  stimulate  every  avenue  of  the  life  of  the  nation. 


the  community  and  the  individual.  We  need  food  and  the 
farmer  ought  to  produce  more  food  than  he  is  willing  now  to 
produce.  Since  we  have  this  vast  domain  and  have  appro- 
priated it,  we  ought  to  develop  the  soil,  the  exploitation  of 
which  by  scientific  farming  will  be  only  a  national  good.  We 
see  no  stimulation  of  these  motives  except  in  connection  with 
economic  agricultural  co-operation. 

Another  reason  for  this  belief  is  that  co-operation  will  pre- 
serve the  present  agricultural  structure,  which  is  based  upon 
individual  operation  of  the  land  by  owners.  If  the  farm  is  to 
be  saved  from  exploitation  by  capital,  there  must  be  some 
form  of  combination  of  the  operators  of  the  land.  None 
is  in  sight  except  agricultural  co-operation,  which  seems  to 
be  a  democratic  way  of  doing  what  the  trusts  and  corpora- 
tions do  in  business.  We  believe  it  is  a  good  thing  for  the 
individual  to  own  and  operate  a  farm;  morally  good  and  edu- 
cationally good.  However  that  may  be,  all  our  motives  go 
toward  the  conserving  of  the  individualistic  industry  of 
farming.  If  there  were  no  such  ethical  motives,  it  still  re- 
mains that  the  individual  farm  operator  is  the  most  produc- 
tive of  all  the  forms  of  agriculture  the  world  has  ever  known. 
To  support  that  operator-owner,  agricultural  co-operation 
seems  in  the  light  of  world-wide  experience  to  be  necessary. 

Two  objections  arise.  One  is  that  these  social  workers  are 
all  promoting  institutions  for  consumption  while  co-operation 
is  a  form  of  production.  That  is  true.  The  reasons  just 
given,  however,  are  in  the  minds  of  those  who  are  concerned 
with  better  living  in  the  country.  Production  must  precede 
consumption. 

The  second  objection  is  the  routine  objection  of  the  modern 
psychologists,  to  the  effect  that  the  spiritual  gains  of  the 
co-operative  processes  will  not  "carry  over"  into  ethical  and 
educational  reforms  or  into  religious  states  of  mind.  That  is 
probably  true.  To  recite  it,  however,  is  onlv  to  face  with 
greater  clearness  the  real  reasons  which  constrain  the  ideal- 
ists to  believe  in  agricultural  co-operation.  They  believe  that 
the  country  people  are  starved,  that  farming  is  a  deficit  occu- 
pation which  does  not  pay  expenses,  that  without  material 
gains  its  spirituality  is  deadened  and  its  idealistic  progress 
is  aborted. 

The  experience  of  western  European  countries  in  co-oper- 
ation furnishes  the  body  of  our  hopes.  There  we  have  seen 
that  the  farming  population,  if  wealth  is  distributed  among 
them,  will  provide  themselves  with  a  reasonable  supply  of 
religious,  educational  and  idealistic  institutions.  This  is  what 
we  hope  for  America. 


Reprinted  from  HOME  LANDS,  .'August  and  October  numbers,  1922. 
In  lots  of  25-100,  14  cents.each;  100  or_more  12  cents. 


Price  15  cents  each,  postpaid,  from  the  author.  Room  811,  70  Fifth  Avenue,  New  Yorlc. 


4^|^35 


/•.::•*:•*.*:•*'•'•::    :*;...•   Pacemakers   in  Farmers'   Co-operation 


Z-3 


CHAPTER  I.    Why  Farmers'  Co-operation? 


ONLY  some  unusual  emergency  or  condition  brought 
about  co-operation  among  farmers  in  the  first  periods 
of  the  settlement  of  this  country.  The  New  Jersey 
Bay  Companies  are  an  illustration  of  such  co-operation  in 
the  early  days.  Farmers  living  along  the  shores  of  the 
Delaware  Bay  needed  protection  from  tides,  and  prior  to  the 
American  Revolution  organized  co-operative  companies  for 
building  dikes.  The  farmer  paid  a  small  sum  per  acre  for 
the  protection,  and  the  bank  masters  of  the  co-operatives 
were  paid  by  the  hour  for  building  dikes.  Many  companies 
are  still  in  existence.  New  Jersey  early  made  a  law  for  their 
incorporation.  They  made  productive  thousands  of  acres  of 
land  which  would  otherwise  have  been  mere  tide  marsh. 

The  large  development  of  agi-icultural  co-operation  which 
has  taken  place  since  1900  and  particularly  since  1910  has 
had  no  slow,  steady  growth  over  our  history.  The  principles 
of  co-operation  had  their  beginning  from  that  little  group 
of  English  wage  earners  called  the  Rochdalers,  who,  when 
out  of  work  in  1844,  decided  to  organize  their  own  retail 
store  on  the  basis  of  a  one-man,  one-vote  plan  and  to  dis- 
tribute profits  on  the  basis  of  the  amount  of  business  done 
with  the  concern,  instead  of  the  amount  of  stock  held,  but 
these  principles  were  applied  only  spasmodically  and,  com- 
pared with  present  developments,  on  no  really  large  scale 
before  1895  or  1900.  The  first  large  attempt  at  agricultural 
co-operation  was  that  of  the  Grange,  or  Patrons  of  Hus- 
bandry, in  organizing  stores  among  the  farmers  in  the  '70s. 
Organized  in  1866,  the  Grange  has  been  one  of  the  powerful 
factors  in  our  agricultural  life.  But  few  of  the  early  stores 
lasted  long.  The  members  were  not  ready  for  co-operation. 
There  were  mistakes  of  management,  and  the  move  created 
fierce  competition  with  which  the  new  stores  were  unable  to 
cope.  The  practice  of  selling  goods  to  the  consumer  at  as 
nearly  wholesale  cost  as  possible  proved  disastrous;  the  co- 
operative was  forced  to  operate  on  too  small  a  margin  of 
profit,  the  competing  retailer  was  forced  to  reduce  his  prices 
and  most  of  the  co-operative  stores  soon  quit.  There  are 
memories  or  traces  of  most  of  them  in  many  parts  of  the 
country  and  very  few  survive.  Today  the  successful  co- 
operative store  sells  at  current  market  prices,  not  at  cost, 
and  the  stockholder  benefits  through  profits  returned  ac- 
cording to  the  amount  of  business  done. 

The  Grange  and  the  Farmers'  Alliance — the  latter  most 
successful  in  the  Southwest— began,  among  other  activities, 
the  system  of  trade  discounts,  whereby  the  local  farmers' 
organizations  pooled  their  orders  for  supplies  with  certain 
favored  wholesalers.  Very  great  savings  were  thus  effected, 
especially  in  buying  fertilizer  and  implements.  The  Grange, 
and  in  some  sections  the  Farmers'  Union,  carry  on  this 
method  on  a  large  scale  today. 

THE  upward  swing  of  the  present  co-operative  move- 
ment began  about  1890.  Then  a  few  pioneer  co-oper- 
ative grain  elevators  appeared  here  and  there  through 
the  Central  West.  Creameries  and  cheese  factories  were  very 
sparsely  scattered  throughout  the  country.  The  California 
fruit  growers  organized  the  California  Fruit  Union  in  1886 
and  struggled  onward  to  their  goal.  Fruit  and  truck  ex- 
changes began  to  appear  in  the  East.  An  attempt  was  made 
at  livestock  shipping  on  what  was  then  a  large  scale  in  Illi- 
nois in  1899.  By  1890  considerable  legislation  regulating 
co-operatives  existed  in  some  states. 

The  California  Fruit  Growers'  Exchange  was  organized 
in  1895,  and  it  pioneered  with  the  type  of  organization  which 


is  more  and  more  prevalent  today.  This  was  a  large  selling 
and  advertising  organization,  founded  with  capital  stock, 
but  later  shifted  to  the  non-stock  plan.  It  was  to  sell  the 
farmers'  fruit  to  the  city  wholesaler,  avoiding  the  packer 
and  the  speculator,  vnthout  profit  to  itself,  without  even  a 
fixed  charge,  but  for  its  own  cost.  The  non-stock  plan  keeps 
out  the  investor,  and  confines  the  enterprise  to  producers. 
The  organizations  of  the  early  days  paved  the  way  for  many 
great  organizations  which  are  being  built  up  in  the  twentieth 
century,  and  the  lessons  from  their  failures  and  successes 
have  played  no  small  part  in  making  possible  the  success  of 
the  large  co-operatives  at  work  today. 

THOUGH  the  foundations  were  laid  for  the  modern  co- 
operative movement  about  the  year  1890,  no  doubt  the 
greatest  results  have  been  recorded  since  the  year 
1910.  For  instance,  a  survey  made  in  1916  by  Professor 
Theodore  Macklin,  then  of  the  Kansas  State  College  of 
Agriculture,  in  regard  to  the  date  of  organization  of  199 
local  co-operatives  in  the  state  of  Kansas,  showed  that  only 
one  had  been  organized  as  early  as  1875.  Only  five  per  cent 
of  the  organizations  had  been  launched  before  the  year  1900, 
while  62.3  per  cent  were  begun  between  1910  and  the  first 
few  months  of  1916.  A  glance  through  the  year  books  of 
the  departments  of  agriculture  reveals  that  little  notice  was 
given  to  co-operatives  before  the  year  1910.  Now  we  have 
accounts  of  sigfnificant  enterprises  which  are  passed  on  that 
farmers  in  other  communities  may  do  likewise,  and  thorough 
studies  have  been  presented  of  methods  of  management  and 
marketing,  training  of  managers,  keeping  accounts,  etc.  The 
files  of  the  agricultural  journals  tell  the  same  story. 

Farmers  were  for  the  most  part  busied  with  production. 
But  power  machinery,  agricultural  science  and  experiments 
were  making  great  strides  in  solving  problems  of  production. 
If  the  main  problems  of  production  were  solved,  this  would 
not  greatly  better  the  farmers'  position.  What  if  they  raised 
the  world's  largest  crop  and  could  not  sell  it  to  advantage? 
Slowly  farming  became  more  of  a  business.  The  day  of  the 
household  farmer  and  his  more  individualistic  life  passed. 
The  time  came  to  talk  of  saving  handling  costs  in  shipping 
grain,  of  pooling  milk  sales,  of  grading  products,  building 
warehouses,  studying  marketing  and  creating  eflicient 
marketing  organizations.  The  main  problems  still  before 
the  farmers  have  to  do  with  our  distribution  system. 

There  has  been  great  dissatisfaction  with  the  amount  of 
money  received  by  middlemen  for  services  in  the  marketing 
process.  The  men  who  produced  milk  on  the  farms  of  New 
Jersey  and  received  five  and  one-half  cents  a  quart  for  it, 
less  transportation,  are  not  convinced  that  selected  Grade  A 
milk  should  sell,  as  it  did,  to  the  city  consumer  for  twenty- 
one  cents  a  quart.  The  men  who  raise  wheat  hold  that  some- 
thing must  be  done  to  prevent  the  brokers  from  selling  and 
reselling,  and  taking  sometimes  several  profits.  And  they 
are  bold  enough  to  believe  they  can  build  up  at  least  one  or 
two  more  economical  marketing  agencies.  Prunes  which  sold 
to  the  consumer  in  Chicago  for  forty  cents  a  pound  in  1921 
were  sold  by  the  California  farmers  for  six  and  seven  cents. 
According  to  figures  of  the  Federal  Department  of  Ag:ri- 
culture,  farmers  in  general  receive  about  40  per  cent  of  the 
price  the  consumer  pays  for  farm  products,  the  railroads 
and  wholesalers  get  30  per  cent,  and  the  retailers  30  per  cent. 

Often  the  local  dealers  have  not  "played  square"  and  have 
caused  farmers  to  organize  co-operative  organizations.     In 


f     •  •  •     • 
•"  •  »    •   » 

•     •    •       »     • 


Pacemalfers   in   Farmers'    Co-operation   '•.■  .•' 


••.  ?•.  •.  •  • 


Center  Valley,  Pennsylvania,  a  group  of  Mennonite  farm- 
ers, dissatisfied  with  the  treatment  they  were  receiving  from 
local  feed  dealers,  formed  a  feed  store  of  their  own,  ran  it 
on  the  principle  of  service  rather  than  profit,  and  are  gradu- 
ally doing  more  of  the  feed  business  in  the  neighborhood. 
The  Country  Gentleman  in  an  editorial  in  its  issue  of  May 
28,  1921,  tells  this  typical  story: 

"The  farmers  in  Limestone  County,  Alabama,  built  up  a 
fine  hog  raising  industry,  but  they  were  far  from  a  central 
market  and  sold  their  animals  to  professional  buyers.  The 
returns  were  very  disappointing  to  the  farmers.  They  or- 
ganized the  Better  Farming  Association  and  marketed  their 
hogs  co-operatively.  On  twenty  carloads  sold  this  way  they 
received  four  cents  a  pound  more  than  was  offered  by  the 
local  buyers.    Their  saving  in  one  year  was  around  $12,000." 

Leaders  in  the  community  sometimes  educate  the  farmers 
to  the  advantages  of  co-operation.  Dean  Mann  of  the  New 
York  State  College  of  Agriculture  tells  this  story  which 
shows  how  the  beginning  is  sometimes  made : 

"One  of  our  students  now  studying  agriculture  is  pastor 
of  a  Quaker  church  in  a  village  about  fifteen  miles  from 
Ithaca.  Last  week  he  took  one  of  our  professors  home  with 
him  for  an  evening  meeting,  to  consider  with  his  farmers 
certain  problems  of  buying  and  selling.  After  the  address 
the  pastor  himself  gave  to  the  people  some  of  the  technical 
information  he  had  gained  at  the  college.  Then  he  pro- 
moted a  proposal  for  the  introduction  of  pure  clover  seed, 
and  took  orders  for  some  thirty  bushels  of  seed  as  a  pooled 
order." 

THE  fall  of  wholesale  prices  of  farm  products  which 
began  in  1920  has  for  the  most  part  increased  the  soli- 
darity among  farmers.  There  seem  to  have  been  no 
more  failures  of  co-operatives  than  during  previous  years. 
The  drop  in  prices  has  hastened  co-operative  development. 
The  man  who  raised  1.500  bushels  of  potatoes  in  1920  at  a 
cost  of  a  thousand  dollars,  not  including  any  interest  on 
land  or  depreciation  costs,  and  sold  in  early  1921  for  twenty- 
two  cents  a  bushel,  less  freight,  then,  is  very  likely  to  be  a 
co-operator  at  a  Grange  or  a  Farmers'  Exchange  today.  The 
fact  that  he  read  in  the  spring  of  1921  that  potatoes  were 
selling  for  $2.50  a  bushel  in  a  nearby  city,  while  thousands 
of  bushels  were  rotting  in  Maine,  rather  aids  such  a  process. 
No  logic  could  convince  him  after  transactions  and  news 
like  that,  that  the  food  distribution  process  cannot  be  changed. 
This  is  only  one  illustration,  but  figures  of  the  United  States 
Bureau  of  Labor  Statistics  showed  that  in  June,  1921,  whole- 
sale prices  of  farm  products  were  only  thirteen  per  cent 
above  the  1913  level,  while  all  commodities  at  wholesale  were 
still  forty-eight  per  cent  above.  Chemicals  and  drugs — in- 
cluding farmers'  fertilizers — stood  at  sixty-six  per  cent 
above,  cloths  and  clothing  at  eighty  per  cent,  lumber  and 
building  materials  at  102  per  cent,  house  furnishings  at  150 
per  cent.  Even  metals  and  metal  products  going  into  farm 
machinery  were  thirty-two  per  cent  above  the  1913  level. 

Dire  necessity  has  always  been  a  big  propeller  of  the  co- 
operative movement.  In  the  great  corn  belt,  for  instance, 
farmers  received  in  1921  perhaps  five  cents  an  hour  for  their 
long  hours  of  labor.     Some  in  less  favorable  circumstances 


received  less  per  hour  and  some  nothing.  Studies  in  Indiana 
showed  a  return  of  only  2.05  cents  per  hour  for  man  and 
1.02  cents  for  horse  labor.  On  this  subject  Professor  Asher 
Hobson,  formerly  assistant  chief  in  the  office  of  Farm  Man- 
agement in  the  Federal  Department  of  Agriculture  and  now 
Associate  Professor  of  Economic  Agriculture  at  Columbia 
University,  in  an  interview  in  the  New  York  Times  for  Oc- 
tober 3,  1920,  says  the  following: 

"Detailed  analysis  of  farm  incomes  made  by  the  Depart- 
ment of  Agriculture  of  8,712  farms  in  twenty-eight  repre- 
sentative districts  in  the  United  States  (and  this  analysis  was 
continued  for  a  period  of  years  on  many  of  these  farms) 
shows  that  out  of  the  total  farm  income,  after  paying  5  per 
cent  on  the  investment  and  labor  at  minimum  wages  to  the 
members  of  the  farmers'  family  who  actually  performed 
farm  labor  with  him,  the  farmer  had  left  on  an  average  less 
than  $500  to  pay  for  his  own  work  and  managerial  ability 
for  the  year." 

Mr.  Milo  D.  Campbell,  President  of  the  National  Milk 
Producers'  Federation — an  organization  representing  various 
co-operative  dairy  interests — said  at  the  National  Dairy 
Marketing  Conference  in  Chicago,  May  4,  1921  "There  are 

today  23,000,000  cows  in  the  United  States Not  3,000,000 

of  them  are  returning  a  profit  to  their  owners." 

There  appears  to  be  a  serious  shrinkage  in  the  pur- 
chasing power  of  farm  products  in  the  past  decade.  The 
gist  of  Bulletin  999  published  in  September,  1921,  by  the 
United  States  Department  of  Agriculture  under  the  author- 
ship of  Professor  G.  F.  Warren,  one  of  the  ablest  agricul- 
tural economists,  is  thus  summarized  in  Wallace's  Farmer 
of  September  23,  1921 :  "In  1919  the  farmer  had  $1.06  to  buy 
a  dollar's  worth  of  goods.  Today  he  has  seventy  cents.  How- 
ever, indications  point  to  a  marked  improvement  in  the  very 
near  future."  The  bulletin  contains  much  excellent  infor- 
mation and  many  recommendations  and  suggestions  deserv- 
ing further  study.  Farmers  see  industrial  laborers,  work- 
ing short  days,  paid  ord'narily  from  five  to  ten  times  their 
rates  for  longer  days.  They  are  trying  to  increase  their  own 
incomes,  and  they  are  pulling  together.  Economic  necessity 
is  perhaps  the  strongest  force  in  bringing  co-operative  or- 
ganizations. 

GLUTTED  markets  and  unstabilized  prices  have  long 
been  causes  of  complaint.  Hence  the  farmers  want 
more  storage  facilities  and  more  marketing  informa- 
tion. They  see  the  folly  of  trying  to  sell  their  crops  within 
three  or  four  months  of  the  year  and  allowing  someone  else 
to  do  the  storing.  They  want  the  storage  in  their  own  hands 
and,  as  far  as  possible,  shipments  regularly  made  throughout 
the  year. 

The  farmers  wish  to  improve  credit  conditions.  The  in- 
dividuals who  store  non-perishable  products  in  their  bins 
have  a  hard  time  borrowing  from  banks  in  their  present 
attitude.  But  with  their  products  pooled  in  central  ware- 
houses, the  producers  through  their  marketing  corporations 
can  ask  loans  on  warehouse  receipts.  Experience  has  demon- 
strated that  farmers  successfully  organized  for  a  period  of 
years  can  in  many  localities  secure  the  necessary  credit  ac- 
commodations. The  War  Finance  Corporation  of  the  Fed- 
eral Government  has  during  the  past  two  years  made  loans 
directly  to  co-operative  organizations  against  negotiable 
warehouse  receipts  for  staple  farm  products. 


CHAPTER  II.    The  Local  Co-operative  Associations 


IN  view  of  the  varieties  of  co-operative  organizations,  it  is 
rather  hard  to  describe  briefly  what  a  local  co-operative 
association  is.  Types  of  organizations  have  been  de- 
termined by  local  preference  or  by  existing  laws.  Sometimes 
associations  have  been  hurriedly  formed  and  methods  and 
management  are  later  changed.  The  best  opinion  among 
leaders  seems  to  cling  to  most  of  the  principles  of  the  English 


Rochdale  pioneers.  A  local  organization  having  the  fol- 
lowing features  is  working  very  successfully  and  seems  to  be 
the  goal  toward  which  many  associations  not  so  organized 
are  striving: 

1.  Every  shareholder  has  one  vote  regardless  of  the 
amount  of  stock  he  holds.  The  fundamental  thing  is  equal- 
ity and  democracy.     Farmers  have  developed  some  success- 


4 


Pacemakers   in  Farmers'   Co-operation 


ful  organizations  with  voting  by  shares,  when  these  have 
been  strictly  limited  per  member.  The  aim  is  always  to 
prevent  easy  control  by  a  few. 

2.  Capital  invested  should  receive  a  low  fixed  rate  of  in- 
terest. This  is  usually  the  prevailing  interest  rate  in  the 
community.  Invested  capital  thus  receives  only  these 
"wages."    It  does  not  receive  profits  or  savings. 

3.  Profits  or  dividends  are  returned  to  the  stockholder 
according  to  the  amount  of  business  he  has  done  with  the 
organization.  This  is  the  so-called  "patronage  dividend"  as 
distinguished  from  the  dividend  according  to  shares  which 
the  ordinary  business  corporation  returns. 

4.  The  total  number  of  shares  should  be  small  in  number. 
Every  member  should  hold  only  a  restricted  number.  Mem- 
bership in  the  organization  should  be  limited  to  co-operators 
— the  producing  farmer.     The  investor  should  be  eliminated. 

The  Rochdale  principle  of  an  educational  fund,  provided 
for  before  the  dividend,  has  not  been  adopted  by  the  co- 
operating farmers  except  in  isolated  cases.  Reserve  funds 
are  often  built  up  but  mostly  to  take  care  of  business  losses. 
The  above  four  Rochdale  principles,  have,  however,  been 
extensively  used  and  are  looked  upon  as  the  most  desirable 
methods  for  conducting  an  organization. 

There  is  an  increasing  opinion,  too,  in  favor  of  the  mem- 
bership contract  in  a  selling  organization.  The  individual 
farmer  agrees  to  deliver  all  his  products  for  a  certain  period 
of  years,  usually  five  or  seven.  Often  there  is  a  penalty  in 
case  the  contract  is  broken.  Again,  provision  is  often  made 
for  cancellation  by  the  member  on  giving  reasonable  notice. 
Opinion  seems  to  favor  either  a  compulsory  or  voluntary 
pool,  allowing  for  grading  of  products,  assuring  an  equal 
return  for  the  same  grade  of  products,  no  matter  by  whom 
or  in  what  quantity  grown.  Some  organizations  start  with- 
out capital  stock  and  others  shift  to  this  plan.  By  this 
method  the  farmer  holds  a  membership  and  associations  can 
easily  be  begun  on  the  non-stock  plan  if  members  have  signed 
contracts  agreeing  to  deliver  certain  quantities  of  produce, 
against  which  the  organizations  can  borrow  money  to  start 
business  or  to  build  or  purchase  equipment. 

It  is  generally  understood  that  an  organization  is  co- 
operative when  it  is  organized  on  the  four  cornerstones 
above  mentioned.  But  there  is  such  a  lack  of  uniformity 
among  our  agricultural  associations  that  usually  an  organi- 
zation having  some  of  the  strictly  co-operative  features 
passes  as  co-operative  and  is  often  very  successful.  The  local 
associations  among  the  California  farmers  measure  up  well 
to  the  highest  standard  which  may  be  set.  It  seems  that  at 
least  half  of  the  local  farmers'  grain  elevator  associations, 
the  creameries,  cheese  factories,  the  fruit  and 
truck  exchanges  and  most  of  the  live  stock 
shipping  associations  and  dairymen's  leagues 
and  those  organizations  started  by  the  Farm- 
ers' Union,  the  American  Society  of  Equity, 
the  Farm  Bureau  and  the  Grange,  may  well  be 
classed  among  the  more  co-operative  group.  It 
would  be  very  difficult  to  draw  the  line  between 
the  strictly  co-operative  farmers'  organizations 
and  those  which  merely  follow  the  conventional 
private  business.  In  the  minds  of  most  people  the 
one-man  one-vote  feature  and  patronage  dividends 
make  a  concern  co-operative.  But  the  Federal 
Trade  Commission,  in  investigating  the  country 
grain  business,  classed  as  co-operative  every  local 
farmers'  grain  elevator  run  for  the  benefit  of  the 
group,  in  distinction  to  the  privately  owned  which 
was  operated  for  the  profit  of  one  or  a  few  indi- 
viduals. The  trend  is  undoubtedly  toward  the 
adoption  of  the  more  co-operative  features.  But 
at  present  stage  of  the  movement  the  word  co- 
operative is  used  loosely. 


I 


THE  SITUATION  IN  WELL-DEVELOPED  AREAS 
N  September,  1920,  the  Federal  Department  of  Agricul- 
ture reported  at  least  14,000  farmers'  buying  and  sell- 
ing organizations.  In  the  summer  of  1921  the  number 
of  local  co-operative  enterprises  in  the  United  States  was 
estimated  at  around  15,000  and  the  amount  of  business  done 
at  about  two  billion  dollars  per  year.  The  number  is  in- 
creasing rapidly  and  there  are  no  accurate  figures.  Out 
of  5,424  organizations  which  reported  to  the  Bureau  of  Mar- 
kets of  the  Department  of  Agriculture  in  1914,  1,637  were 
grain  elevators  and  warehouses,  1,708  were  creameries  and 
cheese  factories,  275  were  stores,  871  handled  fruit  and 
vegetables,  213  cotton,  43  tobacco,  96  livestock,  and  581  were 
miscellaneous  organizations. 

The  County  Farm  bureaus  and  county  agricultural  agents 
in  the  Northern  and  Western  States  helped  to  organize  1,988 
local  co-operatives  in  the  year  1920.  These  did  a  business 
worth  $40,000,000.  The  estimated  saving  to  the  farmers 
through  these  co-operative  ventures  was  $2,899,764.  Be- 
tween 1915  and  1920  the  amount  of  business  done  by  associa- 
tions started  through  the  help  of  county  agents  in  these 
states  has  increased  from  $3,764,783  to  $375,714,660.  The 
estimated  saving  to  the  farmers  in  these  organizations  is 
over  $20,000,000  per  year.  In  Minnesota,  for  instance,  the 
county  agents  helped  to  form  114  marketing  associations 
in  1921.  Twenty  handled  potatoes,  twelve  wool,  fifty-one 
livestock,  nineteen  butter,  four  grain,  and  eight  were  classed 
as  miscellaneous.  In  addition  the  agents  assisted  many 
associations  previously  formed,  and  also  rendered  aid  in 
marketing  to  11,464  farmers  not  in  associations  throughout 
the  state. 

"Livestock  shipping  associations  in  the  Middle  West  are 
spreading  faster  than  a  prairie  fire,"  writes  Mr.  Stuart  O. 
Blythe  in  The  Country  Gentleman  for  July  10,  1920.  That  is 
a  good  figure  when  you  consider  that  in  1916  the  State  of 
Iowa,  for  instance,  had  fifty-seven  livestock  shipping  asso- 
ciations. In  the  summer  of  1921  there  were  647  and  they 
handled  one-fourth  of  the  livestock  sent  out  of  the  state. 
The  number  has  grown  from  about  one  organization  in 
every  two  counties  to  six  or  seven  per  county.  That  is  prac- 
tically putting  one  within  the  reach  of  every  farmer.  The 
Federal  Bureau  of  Markets  had  a  list  of  five  hundred  asso- 
ciations in  1910.  A  majority  of  these  had  been  formed  in 
the  State  of  Minnesota.  In  1921,  though  no  one  knew  the 
number  of  co-operative  livestock  shipping  associations  in  the 
Central  West,  it  was  placed  between  2,500  and  4,000.    During 


There  are  5,000  farmers'  grain  elevators  in  the  United  States 


Pacemakers   in  Farmers'   Co-operation 


the  same  year  it  was  estimated  that  about  one-third  of  the 
shipments  of  stock  arriving  at  Chicago  were  from  co-opera- 
tive shippers.  At  South  St.  Paul  the  figure  was  said  to  be 
seventy-five  per  cent,  at  Detroit  seventy  per  cent,  and  at 
other  terminal  markets  in  the  Middle  West  thirty  or  forty 

■  per  cent.  These  local  associations  are  sometimes  on  a  county 
scale;  again,  there  may  be  twelve  or  as  high  as  eighteen 
or  nineteen  in  a  county  which  is  a  heavy  stock  producer. 

THE  farmers'  grain  elevator  is  here  in  great  numbers 
in  the  Central  and  Northwest.  Several  years  ago 
there  were  said  to  be  4,000  local  grain  elevators.  In 
1921  the  number  was  estimated  to  be  5,000,  though  some 
would  claim  6,000.  It  is  safe  to  say  that  the  co-operative 
grain  elevator  is  spreading.  Most  of  them  have  been  built 
during  the  last  fifteen  or  twenty  years.  The  Federal  Trade 
Commission's  latest  published  report, — for  the  crop  year 
1919-20, — states  that  co-operative  grain  elevators  are  being 
built  at  the  country  stations  more  rapidly  than  any  other 
kind.  Wallace's  Farmer  reports  editorially  that  in  Iowa 
half  of  the  grain  elevators  have  gone  over  to  the  patronage 
dividend  system  within  the  last  few  years, — showing  the  ten- 
dency of  the  old  companies  to  apply  more  and  more  of  the 
co-operative  principles.  These  local  associations  are  the 
basis  of  gigantic  state  and  regional  organizations  to  be  dis- 
cussed in  Chapter  III. 

The  Kansas  State  Branch  of  the  Farmers'  Union  has  640 
locals  which  have  been  formed  in  the  past  thirteen  years. 
The  Union  runs  elevators,  stores  and  other  organizations. 
In  the  year  1919  these  locals  did  a  business  worth  $150,- 
000,000.  In  Nebraska  all  the  co-operatives  did  a  business 
worth  $100,000,000  during  1920.  There  are  244  elevators 
classed  as  co-operative  and  141  stores.  In  Minnesota  one 
co-operative  elevator  was  organized  as  early  as  1876,  and 
another  in  1884.  Here  the  early  Grange  stores  failed  as 
elsewhere.  By  the  year  1890  the  co-operative  movement  be- 
gan to  make  noticeable  strides.  By  1921  the  state  had  1,910 
organizations  for  marketing  alone,  and  1,360  non-marketing 
associations.  There  were  650  creameries,  450  livestock  ship- 
ping associations,  100  stores,  400  grain  elevators,  100  potato 
shipping  associations,  100  buying  clubs,  thirty  wool  pools. 
For  the  year  ending  June,  1920,  all  the  co-operatives  of  the 
state  did  a  business  worth  $200,000,000.  The  branches  of 
the  co-operatives  which  stood  highest  were  the  creameries 

■  which  did  a  $75,000,000  business  and  the  shipping  associa- 
tions which  marketed  $35,000,000  worth  of  cattle.  The  latter 
are  handling  about  70  per  cent  of  the  livestock  produced  in 
the  state.  Wisconsin  in  1917  had  718  co-operative  cheese 
factories  and   380  co-operative   creameries,   in   all  2,000   co- 


operatives of  all  kinds.  The  work  of  active  organization  be- 
gan about  1885.  Much  of  the  first  promotional  work  failed. 
Since  1890  there  has  been  a  steady  growth,  and  Wisconsin  is 
one  of  the  leading  states  in  co-operative  enterprise. 

A   SURVEY   OF   2,575    RURAL   COMMUNITIES 

THE  data  in  the  previous  section  give  some  idea  of  high 
development  in  certain  areas.  Co-operative  enterprises 
among  farmers,  especially  those  engaged  in  selling, 
are  most  numerous  in  areas  where  specialties  or  where  one 
crop  or  one  main  crop  predominates.  It  is  hard  for  an  or- 
ganization to  sell  a  variety  of  products,  and  to  receive  these 
in  small  and  uncertain  quantities.  A  few  of  the  truck  and 
fruit  exchanges  succeed,  but  on  the  whole  where  there  is 
greater  diversification  there  is  less  co-operative   selling. 

There  are  2,575  communities  in  the  202  counties  included 
in  this  tabulation,  the  counties  having  been  selected,  as  be- 
fore stated,  from  600  available,  so  as  to  get  as  equal  as 
possible  a  representation  from  all  sections.  Six  hundred 
and  fifty  communities,  or  25.2  per  cent  of  this  total  of  2,575 
communities,  have  one  or  more  local  co-operative  enterprises 
among  farmers  for  buying,  selling,  shipping,  packing  or 
some  first  step  in  the  distribution  system  as  the  making  of 
butter  and  cheese.  Sometimes  there  is  in  one  organization 
a  combination  of  the  above  functions.  If  two  co-operatives 
of  these  types  existed  in  the  community,  the  one  which  pre- 
dominated in  the  region  was  chosen  for  study:  for  example, 
in  the  dairy  sections  the  creameries  or  cheese  factories  over 
against  the  purchasing  associations.  If  two  or  more  similar 
organizations  were  in  the  same  community,  information  was 
tabulated  for  only  one. 

That  one  community  in  four  already  had  at  least  one  or- 
ganization in  1920  indicates  a  good  beginning,  but  there  were 
then  some  areas  where  co-operation  had  not  yet  obtained  a 
real  foothold.  The  proportion  of  communities  which  had  one 
or  more  organizations  is  as  follows: 


REGION 

3  5 

S50 

Sfef 

6»a 

^1 

Colonial     

25 

543 
469 
206 
133 
43 
2202 
233 
630 
117 

2675 

116 
71 
24 
28 
19 
30 
67 

243 
62 

650 

20. 

Southern   

40 

15. 

So.  Highlands 

14 

24 

12. 
21. 

46. 

Pacific    

16 

29 

Middle    West     

44 

39. 

15 

45. 

Totals     

202 

25.3 

Dairy  products  are  increasingly  marketed  through 
co-operative  agencies 


There  were  many  sections  of  the  Middle  West 
or  Prairie  where  counties  had  nearly  every  com- 
munity organized,  but  for  the  entire  region,  for 
all  sections,  the  more  prosperous  and  the  less,  this 
gives  a  fair  picture  of  co-operation  among  Ameri- 
can farmers  in  1920.  The  regions  which  had  the 
greatest  proportions  of  communities  with  enter- 
prises were  the  Northwest,  Prairie,  Middle  West 
and  Pacific.  There  are  some  obvious  and  inter- 
esting reasons  for  the  variations  in  the  percent- 
ages. In  the  Southern  Appalachian  Highlands 
there  are  few  co-operatives  because  of  individual- 
ism, conservatism,  poor  transportation  and  the 
small  amounts  of  produce  grown.  The  Middle  and 
Northwest  and  the  Prairie  are  leading  regions 
largely  because  they  grow  large  quantities  of  one 
or  a  few  crops  which  can  well  be  handled  co-oper- 
atively. The  Pacific  states  have  long  been  famous 
for  their  prosperous  sections  gnrowing  large  quan- 


Pacemakers   in   Farmers'   Co-operalion 


tities  of  specialties,  and  these  have  always  been  most  easily 
handled.  In  the  South  the  proportion  was  low  due  to  the 
handicaps  in  the  way  cotton  and  tobacco  are  grown,  on 
plantations  and  by  tenants.  The  figures  for  the  Eastern 
states  are  to  some  extent  low  because  of  diversification.  (In 
the  South  and  the  East  undoubtedly  most  progress  has  been 
made  since  these  figures  were  gathered  in  1920.) 

IN  these  202  counties  are  359,204  farmers,  according  to 
the  1920  census  figures  on  agriculture.  In  the  650  co- 
operative organizations  studied  there  are  80,924  farmers. 
Thus  22.3  per  cent  of  the  operating  farmers  in  these  coun- 
ties are  members.  There  are  sixteen  main  varieties  of  or- 
ganizations, according  to  the  kind  of  business  done,  or  crop 
grown,  or  by  what  agency  organized.  The  following  table 
gives  the  names  of  these  organizations: 


tent  of  co-operative  buying  and  selling  are  somewhere  be- 
tween these  two  extremes. 


THE  STORIES  OF  TYPICAL  LOCALS 
I  HE  accounts  of  the  following  eight  local  organizations 
have  been  selected  to  give  an  idea  of  the  various  types' 
of  organizations,  as  to  their  form  of  management,  as 
well  as  to  variety  of  business  done.  They  show  the  work- 
ings of  local  co-operatives  at  close  range. 


T 


Name  of 
Organization 


No.   of  Local 
Organizations 


Farmers'    Unions    '° 

Cheese  Factories   64 

Creameries   ^^ 

Truck    Growers'     Assn's 16 

Farmers'    Exchanges    19 

Dairymen's  Leagues  and  Assn's  32 

Stores     "^ 

Granges     *  ^ 

Marketing   Assn's    15 

Livestock  Shipping  Assn's 40 

Farmers'    Clubs    13 

Purchasing  Associations 27 

Grain      Elevators     and     Com- 
panies      130 

"Equities"    33 

Fruit    Growers'    Exchanges...  39 

Packing  and  Shipping  Assn's.  9 

Miscellaneous    37 

660 


The  1920  Federal  Census 
figures,  much  lower  than 
those  taken  from  any  other 
sources  on  the  extent  of  co- 
operative buying  and  selling, 
may  be  thus  summarized:  511,383  or  7.9  per  cent  of  the  farms 
of  the  United  States  report  co-operative  marketing  of  farm 
products  in  1919.  In  Minnesota  43.9  per  cent  of  all  the  farms 
reported  co-operative  selling.  Figures  for  other  states  show- 
ing a  high  proportion  of  farms  were  as  follows:  South  Da- 
kota 27.1  per  cent,  Nebraska  26.2  per  cent,  Wisconsin  22.6 
per  cent.  North  Dakota  22.4  per  cent,  California  21.9  per 
cent,  Kansas  20.4  per  cent,  Iowa  20.3  per  cent.  The  number 
of  farms  that  reported  purchasing  through  farmers'  organi- 
zations in  1919  was  329,449  or  5.1  per  cent  of  the  total  for 
the  country.  The  states  having  the  highest  proportion  of 
farms  doing  co-operative  purchasing  are  Nebraska  22  per 
cent,  Kansas  19.6  per  cent.  South  Dakota  18.4  per  cent,  Min- 
nesota 16.6  per  cent.  North  Dakota  16.2  per  cent,  Iowa  15.2 
per  cent.  The  large  discrepancy  between  the  census  figures 
and  those  derived  from  co-operative  organizations  may  be 
illustrated  by  quoting  those  from  California.  It  has  been 
very  frequently  reported  in  agricultural  magazines  that  all 
California's  co-operatives  did  a  business  worth  $225,000,000 
in  1919.  According  to  the  census  figures  the  farmers  them- 
selves report  $127,990,981  as  the  value  of  crops  co-operatively 
sold,  and  $4,321,129  as  the  value  of  supplies  bought.  There 
are  two  explanations,  both  of  which  undoubtedly  are  true: 
the  co-operative  organizations  make  exaggerated  claims  as 
to  the  value  of  business  done;  the  census  figures  are  un- 
doubtedly inaccurate  and  too  low.  The  methods  of  conduct- 
ing the  census  could  not  but  result  in  much  confusion  as  to 
the  use  of  the  term  co-operative.    The  real  figures  on  the  ex- 


( Courtesy    Rolit. 

A  Mountain  Store 


Wlghtman) 


The  South  Jersey  Farmers'  Exchange,  Woodstown,  N.  J. 

ORGANIZED  twelve  years  ago,  the  South  Jersey  Farmers' 
Exchange  has  been  a  profitable  farmers'  organization 
for  selling  potatoes  and  tomatoes,  and  purchasing  fertilizer 
and  other  supplies.  It  is  financed  by  the  selling  of  stock  to 
farmers  mainly,  though  others  may  buy.  Members  are 
limited  to  fifteen  shares.  There  are  two  thousand  stock- 
holders, most  of  whom  trans- 
act business  through  the  ex- 
change, and  voting  is  done  by 
shares  held.  Dividends  are 
also  distributed  according  to 
the  amount  of  shares  held. 
By  1916  the  exchange  had 
succeeded  to  such  an  extent 
that  it  declared  a  dividend  of 
one  hundred  per  cent  stock 
and  four  per  cent  cash.  In 
1917  and  1918  six  per  cent 
cash  dividends  were  naid.  In 
1919,  1920  and  1921  the  divi- 
dend was  eight  per  cent.  In 
all  a  total  of  $8.20  was  paid 
in  dividends  during  the  last 
eleven  years  on  every  share 
of  $5.00  invested  in  the  con- 
cern. In  addition,  a  surplus 
fund  is  maintained  and  now 
amounts  to  $145,425.  The 
value  of  sales  for  and  to 
farmers  amounted  to  $363,- 
249  in  1909.  They  steadily 
mounted  until  in  the  year 
1920  the  value  of  all  sales 
was  $2,844,833,  and  in  1921, 
$1,961,004.41.  In  1921,  9,556 
tons  of  fertilizer,  12,550  tons 
of  feed,  950  tons  of  lime  were  purchased,  and  845  cars  of 
potatoes  and  263  cars  of  tomatoes  sold.  The  exchange  is  so 
equipped  that  it  can  ship  potatoes  and  tomatoes  from  and 
fertilizer  to  any  railroad  station  in  South  Jersey. 

Farmers'  Store,  Montvale,  Tennessee 

IN  the  community  of  Montvale  in  the  Southern  Highlands 
a  co-operative  store  was  organized  by  the  farmers  in 
April,  1917.  On  the  one  hand  its  purpose  was  to  sell  part 
of  the  crops  raised  in  the  community.  During  the  last  four 
years  it  has  sold  part  of  the  corn,  oats,  wheat  and  peas,  buy- 
ing from  local  producers  and  then  reselling  to  outside  buyers. 
The  store  also  buys  groceries,  machinery  and  general  store 
supplies  for  sale  to  local  farmers.  A  manager  is  employed 
on  full  time.  In  1921  there  were  fifty-four  stockholders  who 
held  a  total  of  308  shares  at  $10  per  share.  Each  stockholder 
receives  one  vote  and  profits  are  distributed  according  to 
the  amount  of  business  done.  The  total  business  for  the 
last  fiscal  year  amounted  to  $35,000.  This  store  has  suc- 
ceeded though  farmers  are  not  pledged  to  market  all  their 
crops,  but  in  a  region  where  the  farming  is  fairly  well  di- 
versified. 

Credit  Union,  Lowes  Grove,  North  Carolina 

UNDER  the  North  Carolina  rural  credits  law  of  several 
years  ago  one  of  the  first  local  unions  to  be  formed 
was  at  Lowes  Grove.  The  credit  union  performs  in  a  lim- 
ited way  the  function  of  a  local  supply  merchant.  Since 
the  farmers  themselves  own  the  credit  union,  they  take  for 
themselves  the  merchant's  ordinary  profit.  Stock  is  sold, 
and  farmers  who  expect  to  take  advantage  of  loans  buy 
stock  and  become  members  of  the  union.  The  banks  have 
been  friendly  to  the  credit  unions  in  most  of  the  state,  be- 
cause their  formation  has  resulted  in  increased  deposits,  and 


Pacemakers   in   Farmers'   Co-operation 


the  committee  of  the  credit  union  also  is  a  help  in  approving 
applications  for  loans  at  the  banks.  The  Lowes  Grove  Union 
was  opened  January,  1918,  with  fifty-six  members.  There 
was  paid  in  shares  up  to  the  end  of  June  30,  1919,  $1,012.50, 
and  total  short-time  loans  to  the  amount  of  $2,940.94  were 
made.  There  were  in  all  twenty  borrowers.  The  union  it- 
self borrowed  from  the  banks  the  sum  of  $1,000  during  the 
period.  It  has  continued  to  be  an  unusually  useful  organi- 
zation. This  type  of  organization  has  been  a  big  improve- 
ment over  supply  store  credit.  Under  the  North  Carolina 
law  another  farmers'  organization  such  as  the  Farmers' 
Union  may  do  the  actual  purchasing,  and  the  credit  union 
serves  merely  as  an  agency  to  provide  short  time  loans  for 
the  farmers. 

Grain  Elevator,  Spencer,  Iov^a. 

ONE  of  the  early  grain  elevator  companies,  with  some  co- 
operative features,  was  organized  in  Spencer,  the 
county  seat  of  Clay  County,  Iowa,  in  the  j'ear  1907.  It  was 
capitalized  at  $25,000.  One  hundred  and  seventy  farmers 
bought  stock,  each  farmer 
being  limited  to  twenty 
shares.  It  started  its  work  by 
selling  corn  and  oats,  hogs 
and  cattle,  and  buying  coal, 
feed,  flour  and  salt.  A  full- 
time  manager  was  employed, 
and  voting  was  done  by 
amount  of  stock  held.  It  was 
thought  that  limitation  of 
the  amount  of  stock  held 
would  keep  control  demo- 
cratic. A  yearly  dividend 
has  been  declared,  according 
to  the  amount  of  stock  held. 
Capitalization  has  been  in- 
creased to  $75,000.  During 
1920,  125  carloads  of  grain 
were  sold,  and  6,000  tons  of 
coal,  seven  cars  of  salt,  and 
twelve  cars  of  flour  bought 
for  the  members.  Livestock 
shipping  has  been  given  up 
for  the  present.  In  1920, 
despite  the  fall  of  food  prices, 
a  modest  dividend  was  de- 
clared. Though  there  have 
been  some  strenuous  days  in 
the  past,  the  elevator  is  on  a 
sound  basis,  and  there  is  all- 
around  satisfaction,  especially 
with  results  in  selling  grain. 


Livestock  Shipping  Association 
FosTORiA,  Iowa 

THIS  is  the  type  of  organization  which  has  been  spreading 
like  a  prairie  Are  throughout  the  livestock  shipping  areas 
of  the  Middle  West.  The  county  agents  and  various  state 
organizations  have  fostered  and  encouraged  this  type  in 
Iowa.  The  Fostoria  co-operative  was  organized  on  Decem- 
ber 15,  1919,  with  ninety-five  members,  all  being  farmers 
who  shipped  livestock.  No  stock  was  sold  to  float  the  enter- 
prise; a  membership  fee  of  one  dollar  was  charged,  and  at 
business  meetings  each  man  was  to  have  one  vote  in  the 
transaction.  No  local  equipment  is  owned.  A  full-time 
manager  was  hired  who  was  to  receive  a  commission  of  eight 
cents  per  hundred  pounds  of  all  livestock  shipped.  One- 
half  of  one  per  cent  of  the  gross  receipts  are  put  into  a  re- 
serve fund  to  be  used  to  pay  for  losses  of  cattle  in  transit.  At 
the  end  of  one  year's  business  the  membership  increased  to 
122.  Eighty  carloads  of  livestock  had  been  shipped,  valued 
at  $180,000.  The  total  saving  to  the  shippers  was  estimated 
conservatively  at  a  total  of  $6,400.  The  co-operative  re- 
ceived slightly  higher  prices  than  the  local  dealers  offered 
and  was  efficiently  run. 

Selling  Milk  Direct  to  the  Consumer  at  Wichita, 
Kansas 

DURING  1920  there  had  been  some  agitation  in  the  city 
of  Wichita,  Kansas,  for  clean  and  better  milk.  The 
milk  distributors  who  were  buying  up  the  farmers'  product 
paid  no  attention  to  the  appeals  and  kept  on  mixing  milk 
though  the  farmers  objected.     City  organizations  were  urg- 


ing a  clean  milk  ordinance  when  a  group  of  dairymen  in  the 
immediate  vicinity  took  matters  into  their  own  hands.  In 
April,  1921  they  organized  the  Producers'  Dairy  Company 
of  Wichita.  They  determined  to  kill  two  birds  with  one 
stone — they  would  give  the  city,  or  at  least  those  in  the  city 
who  purchased  from  them,  clean  milk,  and  they  would  keep 
for  themselves  the  profit  which  ordinarily  went  to  the  milk 
distributor,  and  which  had  always  seemed  to  them  too  large. 
Thirty-two  farmers  subscribed  to  a  total  of  $20,000  worth 
of  stock.  One  of  the  leading  dairymen  was  elected  manager; 
a  $6,000  pasteurizing  plant  was  built,  and  the  thirty-two 
dairymen  bound  themselves  to  deliver  every  ounce  of  milk 
they  didn't  use  on  their  own  tables.  A  group  of  dairymen 
canvassed  part  of  the  city  for  orders  and  in  one  day  of  so- 
licitation secured  enough  orders  for  all  the  milk  their  four 
hundred  Holsteins  could  produce.  The  aim  of  the  organiza- 
tion is  not  to  cut  the  price  under  that  of  the  professional 
milk  distributors,  but  to  give  the  city  better  milk  than  the 
ordinary  market  affords  at  the  same  price,  and  that  is  a  con- 
siderable advantage. 

Creamery,     Stevens- 
ville,  Montana 

A  MOST  successful  co- 
operative creamery  has 
been  that  located  at  Stevens- 
ville,  Montana.  The  organi- 
zation was  originally  fi- 
nanced by  the  selling  of 
stock,  and  profits  are  dis- 
tributed according  to  the 
amount  of  butter  fat  sold 
through  the  creamery.  Each 
member  has  one  vote.  The 
creamery  now  handles  3,000 
pounds  of  butter  daily, 
manufactures  ice  cream  and 
artificial  ice,  and  also  col- 
lects eggs.  A  dividend  of 
from  five  to  ten  cents  per 
pound  of  butter  fat  was  dis- 
tributed to  the  member-pat- 
rons at  different  times  dur- 
ing the  year  1920.  Organ- 
ized in  1908  with  twenty-two 
members,  it  has  grown  until 
it  now  has  1,200  patrons.  The 
co-operative  creamery  has 
not  only  brought  profits  to 
the  members  by  keeping  op- 
erating expenses  within  8  per  cent  of  the  value  of  produce 
sold,  but  it  has  also  raised  their  standards  of  preparing 
products  for  market.  Only  fresh  eggs  are  received,  and 
none  but  fresh  milk  or  cream.  The  leadership  and  manage- 
ment has  been  good  and  there  has  been  constant  expansion 
of  the  creamery's  business.  During  the  past  year  a  large 
cold  storage  plant  was  erected.  By  installing  the  refriger- 
ator and  insisting  on  high  standards,  the  creamery  has  solved 
the  main  problem  of  marketing  its  products — that  of  in- 
ferior products  suffering  most  in  the  marketing  process. 

Grain  Elevator,  Maize,  Kansas 

ONE  of  the  newer  types  of  co-operative  grain  elevators, 
more  "strictly  co-operative"  than  the  one  at  Spencer, 
Iowa,  is  in  Maize,  Kansas.  It  was  organized  in  the  year 
1918,  and  one  hundred  farmers  bought  stock  in  the  enter- 
prise, a  total  of  $14,000  worth  being  sold.  An  elevator  with 
a  capacity  of  25,000  bushels  of  wheat  was  erected,  a  full-time 
manager  employed  on  salary,  each  stockholder  given  one 
vote  and  business  begun.  Beside  selling  wheat,  the  co-oper- 
ative was  also  to  buy  feed  and  coal.  At  the  end  of  the  first 
year,  1919,  a  dividend  was  declared  equal  to  eight  per  cent 
of  the  amount  of  business  done  during  the  year.  A  small 
sum  was  put  into  a  surplus  account.  Then  came  the  year 
1920  with  its  testing  times  for  all  farmers'  co-operatives. 
Grain  was  marketed  as  wisely  as  possible  but  the  year  ended 
with  a  deficit  of  $800.  This  was  paid  by  the  stockholders 
who  resolved  to  go  on  with  the  venture.  They  were  con- 
vinced that  the  co-operative  was  an  advantage  over  former 
methods.  The  farmers  are  here  giving  their  new  economic 
organizations  a  fair  trial. 


(Courtesy    The    Co-operative    League    of    Ameriea) 

A  Co-operative  Store  in  the  Middle  West 


8 


Pacemakers   in  Farmers'   Co-operation 


THE  RELATION  OF  THE  SPREAD  OF  CO-OPERATIVES 
TO  OTHER  RURAL  FORCES 

FROM  a  study  of  this  large  number  of  communities  there 
appear  a  few  conclusions.  For  instance,  the  co-oper- 
ative economic  organization  accompanies  or  follows 
the  lodge  and  other  social  organization,  that  these  social 
organizations  perhaps  help  to  create  confidence  or  the  type 
of  community  in  which  co-operative  economic  enterprises 
flourish  best.  Of  the  650  communities  with  co-operative  en- 
terprises, 430  or  69  per  cent  also  have  a  lodge.  Of  the  1,925 
communities  without  co-operatives,  924  or  42  per  cent  have 
a  lodge.  The  communities  with  co-operatives  thus  have  a 
much  higher  proportion  of  lodges.  There  is  much  the  same 
story  in  connection  with  other  social  organizations  such  as 
clubs  or  civic  associations:  Of  the  650  communities  with 
co-operative  enterprises,  236  or  36.3  per  cent  have  other  social 
organizations.  Of  the  1925  communities  without  co-opera- 
tives, 423  or  22  per  cent  have  at  least  one  other  social  or- 
ganization. 

The  figures  indicate  the  highest  co-operative  development 
in  communities  where  a  county  agent  has  been  on  the  field. 
Of  the  650  communities  with  co-operatives,  86.3  per  cent  are 
in  counties  which  have  agricultural  agents.  Of  the  1,925 
communities  without  co-operatives,  only  64.8  per  cent  are  in 
communities  which  have  the  services  of  an  agent. 

IT  seems  that  the  proportion  of  farm  tenantry  in  the  com- 
munity does  not  materially  influence  the  spread  of  co- 
operative associations. 
The  two  groups — those  with  and  those  without  co-opera- 
tives— have  about  the  same  proportions  of  communities  with 
a  high  and  low  tenantry.  The  unorganized  group  has  even 
a  higher  proportion  of  communities  with  the  lowest  tenantry. 
While  the  difference  is  hardly  great  enough  to  assert  very 
positively  that  a  higher  proportion  of  tenantry  is  conducive 
to  co-operative  organization,  the  figures  indicate  plainly  that 
communities  with  a  very  low  proportion  have  not  been  more 
frequently  organized.    It  seems  that  tenantry  does  not  g:reat- 


ly  figure.  The  tenant  apparently  joins  the  co-operative,  if 
he  does  not  join  some  other  organizations  in  the  community. 
That  may  be  because  the  co-operative  serves  him  in  a  more 
vital  way.  The  type  of  farming  may  be  an  influence  here, 
but  in  regard  to  this  there  is  no  accurate  data. 

Of  the  421  communities  with  less  than  15  per  cent  of 
foreign  population,  and  with  co-operatives,  115  have  prac- 
tically no  foreign  population  at  all.  A  comparison  with  the 
1,925  communities  without  co-operatives  reveals  that  only 
51  per  cent  have  less  than  15  per  cent  foreign  population, 
over  against  64.8  per  cent  for  the  organized  group. 


CommunitleB  With 
With  Co-operatives 

Foreign  Born  Per  Cent 

Population  of  Number  of  Total 

0-16^      421 

16-26^      63 

26-45^     35 

46-60^      33 

60;^   and    over    98 

Totals    660  100,0 


Oommunities  Without 
C'o-operativfs 

Per  Cent. 
Number        of  Total 


64.8 

983 

51.1 

9.8 

247 

12.8 

5.3 

168 

8.7 

5.1 

170 

8.8 

15.0 

367 

18.6 

Communities  With 
Co-operatives 
Per  Cent,  of  Families  Per 

Kealdent  Fifteen  Years         Number  Cent. 

1-26    130  20.0 

26-60    102  15.7 

61-76    209  32.15  1 

76  and  over 209  32.15) 

Totals    660  100.00 


Communities  Without 
Co-operativts 
Per 
Number  Cent. 


485 

25.2 

439 

22.8 

489 

25.4 

512 

26.6 

62. 


1925 


100.0 


THE  results  may  be  briefly  expressed.     Considering  first 
the   group   of   650   organized  communities,   the   table 
shows  that  64.3  per  cent  of  these  had  over  half  of 
their  families  resident  fifteen  years  or  over.     Comparison 
with  the  group  without  co-operatives  reveals  that  only  52 
per  cent  claim  such  permanence  of  residence. 


Chapter  III.  Progress  Toward  Federation  of  Local  Co-oper- 
atives and  the  Formation  of  Larger  Co-operatives 


THE  development  of  the  local 
association  in  the  rural 
community  has  been  the 
first  step  of  the  farmer-co-operator. 
For  many  years  he  has  been  tak- 
ing the  second  step:  forming  fed- 
erations of  existing  local  organi- 
zations, or  building  larger  organi- 
zations, operating  over  consider- 
able territory,  either  without  the 
local  organization,  or  with  the  lo- 
cal or  district  associations  created 
at  the   same   time   as   the   central 

agency.  If  the  co-operator  was  to  have  a  strong  position  as 
a  marketer  this  step  was  necessary.  Let  us  suppose  that 
"Rectangle  County,  Illinois,"  has  fifteen  local  co-operative 
associations  in  as  many  communities.  They  are  made  up 
of  bands  of  fifty  or  a  hundred  farmers.  If  no  other  scheme 
of  organization  is  developed,  these  small  associations  are 
apt  to  live  unto  themselves  alone,  so  far  as  their  dealings 
with  city  markets  are  concerned.  Obviously  they  may  easily 
compete  with  one  another.  Most  of  them  may  be  shipping 
to  one  city  when  the  market  there  is  glutted,  and  some  might 
more  profitably  ship  elsewhere.  Therefore  their  efforts  must 
be  co-ordinated.  The  evident  thing  to  do  is  to  form  another 
marketing  agency,  operated  and  owned  by  the  local  associa- 
tions or  by  the  individual  members  of  the  locals.  This  agency 
will  be  used  by  and  serve  the  local  groups.  By  means  of  it, 
the  farmer  supplants  a  second  privately-owned  marketing 
agency,  or  middleman,  in  addition  to  the  buyer  or  dealer  in 


"T^HE  question  is  how  far  farmers 
will  be  driven  to  co-operate  by 
our  distribution  system. — From  an 
Editorial,  "The  Country  Gentle- 
man," May  28.  1921. 


the  local  community,  and  gives  to 
the  co-operators  the  accustomed 
profit  of  the  supplanted  agency. 

THE  CALIFORNIA  GROUP 

PROBABLY  the  best  known 
central  agency  of  local  co- 
operatives in  the  United 
States  is  the  California  Fruit 
Growers'  Exchange.  Organized  in 
1895,  its  business  has  constantly  in- 
creased in  volume  and  value  until, 
during  the  year  ending  October  31, 
1921,  it  handled  for  its  10,500  members  over  $61,000,000 
worth  of  oranges,  lemons  and  grape  fruit.  Two  hundred  and 
three  local  associations  are  organized  in  twenty  district  ex- 
changes, and  these  in  turn  form  The  California  Fruit  Grow- 
ers' Exchange.  When  the  lemon  and  orange  growers  first 
organized,  more  than  thirty  years  ago,  they  thought  that  the 
local  association  which  did  the  packing,  grading  and  ship- 
ping would  solve  their  problems.  But  they  were  merely 
competing  with  one  another  and  constantly  shipped  products 
to  glutted  markets.  Beginning  with  the  formation  of  the 
central  organization  in  1895  the  following  plan  has  been 
worked:  Most  of  the  local  associations  pick  the  fruit  by 
employing  bands  of  trained  workers,  thus  avoiding  damage 
to  fruit  from  improper  handling.  All  the  local  associations 
pack,  grade,  load  and  ship  the  fruit.  The  district  exchange 
sells  the  fruit,  in  co-operation  with  the  central  exchange 
which  acts  as  a  clearing  house.     Fruit  always  remains  the 


Pacemaliers   in  Farmers'   Co-operation 


property  of  the  local  associations.  Fruit  is  sold  subject  to  the 
right  of  the  shipper  to  say  when  and  in  what  amount  prod- 
ucts shall  be  shipped  and  to  whom  the  product  shall  be 
sold,  and,  except  at  auction  points,  the  local  association  can 
name  the  price  at  which  it  is  willing  to  sell.  In  1922  the  cen- 
tral exchange  has  agents  in  fifty-three  of  the  principal  mar- 
ket cities.  The  agent  of  the  central  office  communicates  to 
the  district  office  the  best  price  he  is  able  to  obtain,  and  the 
district  exchange  may  reject  or  accept  the  offer.  The  central 
organization  is  an  efficient  marketing  association  which  pro- 
vides the  facilities  through  which  the  fruit  is  distributed. 
It  does  not  charge  a  fixed  commission.  It  is  the  servant  of 
the  growers,  and  all  money  earned  is  returned  to  them,  after 
all  operating  costs  have  been  deducted.  The  central  ex- 
change has  a  contract  with  the  district  exchange,  the  district 
exchange  has  the  same  relation  with  the  local  associations, 
and  the  association  has  a  contract  with  the  growers,  binding 
them  to  deliver  all  their  fruit  for  a  period  of  years.  The 
associations,  however,  reserve  the  right  to  withdraw  from 
the  district  exchange  by  giving  notice  of  withdrawal  at  a 
certain  time  each  year,  and  the  district  exchange  reserves 
the  right  to  withdraw  from  the  California  Fruit  Growers' 
Exchange  in  the  same  manner.  These  relations,  plus  the 
real  co-operative  spirit,  are  deemed  necessary  for  success. 
The  Central  Exchange  handles  72.5%  of  the  citrus  fruit  pro- 
duced in  California,  taking  it  from  the  orchards  to  the  whole- 
salers in  the  large  cities. 

The  California  Fruit  Growers'  Exchange  is  a  non-stock 
organization,  having  been  changed  to  this  plan,  after  it  was 
launched  with  capital  stock.  Its  greatest  benefits  have  come 
through  stabilizing  prices,  by  an  equitable  distribution  of 
the  crop,  by  increasing  the  consumption  of  citrus  fruits 
through  a  national  advertising  campaign,  (it  now  sells  al- 
most as  much  fruit  in  summer  as  in  winter),  and  by  reducing 
the  cost  of  distribution.  The  total  cost  of  all  the  selling 
and  advertising,  including  operating  expenses  of  the  district 
exchanges,  is  equal  to  only  2.32  cents  out  of  every  dollar 
received.  All  in  all,  the  California  Fruit  Growers'  Exchange 
has  achieved  a  most  noteworthy  place  in  the  co-operative 
movement  by  its  great  success  over  a  period  of  twenty-five 
years. 

GROWING  raisins  was  a  most  unprofitable  business  in 
California  until  the  organization  of  the  California 
Associated  Raisin  Company  in  1912.  The  first  vine- 
yards were  put  out  in  1884.  By  1891  raisins  sold  for  a  cent 
a  pound.  Various  types  of  organizations  among  the  farmers 
failed.  Even  with  better  prices  later  on,  there  were  years 
when,  because  of  the  methods  of  distribution  which  then  ob- 
tained, crops  could  not  be  moved.  Then  came  the  Associated 
Raisin  Company.  At  the  end  of  its  first  year,  77%  of  the 
raisins  produced  in  the  state  were  marketed  through  this 
organization.  The  contract  called  for  five  years'  delivery 
from  the  grower.  This  contract  was  upheld  by  the  courts, 
after  being  fought  by  the  private  distributors,  and  this  proved 
to  be  a  great  victory  for  the  cause  of  co-operation  among 
farmers  in  the  state.  The  raisin  crop  has  increased  in 
volume  from  about  35,000  tons  in  1912  to  over  200,000  in 
1920.  In  the  latter  year  the  co-operative  company  con- 
trolled 90%  of  the  crop.  It  was  known  as  the  only  farmers' 
trust  in  the  world.  But  it  has  not  been  convicted  of  an 
illegal  transaction,  has  not  prevented  competition  and,  after 
ten  years  of  organization,  production  of  raisins  in  the 
state  has  increased  over  600%.  Recently  the  company  sold 
320,000,000  five  cent  packages  of  raisins  in  six  months,  by 
means  of  a  special  advertising  and  selling  campaign,  and 
created  increased  consumption  of  their  product, — when  the 
spectre  of  overproduction  loomed  ahead.  There  are  over 
10,000    stockholders,    and    dividends    of    from    6%    to    10% 


have  been  paid  annually.  Every  member  must  own  stock  and 
the  grower  must  also  sign  away  his  voting  power  to  a  board 
of  trustees,  twenty-five  in  number.  They  are  elected  by 
the  stockholders,  by  districts.  These  men  in  turn  elect  a 
board  of  seven  directors,  who  direct  the  company's  affairs. 
This  is  real  concentration  of  control,  undemocratic,  but 
apparently  in  most  respects  successful. 

THE  co-operative  third  in  size  is  the  California  Prune 
and  Apricot  Growers,  Inc.  It  dates  from  the  year 
1917,  and  by  1921  had  over  11,000  farmers  as  mem- 
bers and  through  its  hands  went  over  70%  of  the  prunes  and 
apricots  produced  in  the  state.  Results  among  prune  and 
apricot  growers  have  been  practically  the  same  as  those 
among  the  citrus  fruit  and  raisin  producers.  All  of  the 
state's  co-operatives  are  said  to  have  marketed  $225,000,000 
worth  of  products  in  1919.  In  addition  to  the  big  three,  Cali- 
fornia has  thirty  marketing  associations,  which  are  small 
only  when  compared  to  the  size  of  the  others.  Among  them 
are  co-operatives  which  handle  almonds,  peaches,  walnuts, 
berries,  beans,  pears,  honey,  dairy  products,  eggs,  etc.  The 
Association  of  Poultry  Producers  of  Southern  California  is 
an  example  of  these  small  organizations.  It  handles  over 
$4,500,000  worth  of  eggs  annually. 

IN  a  series  of  articles  on  "Farmers'  Co-operation  in  Cali- 
fornia," appearing  in  "Wallace's  Farmer"  and  the  "Prai- 
rie Farmer,"  Mr.  Herman  Steen  of  the  Standard  Farm  Pa- 
pers, Inc.,  thus  summarized  the  four  fundamental  features 
which  are  carried  out  in  most  of  the  state's  co-operatives: 

"1.  These  marketing  associations  are  organized  by  com- 
modity and  not  by  locality.  Peach  growers  and  orange  grow- 
ers and  bean  growers  may  live  in  the  same  community,  but 
they  market  their  product  through  different  co-operative 
associations.  One  man  may  sell  different  crops  through 
three  or  four  different  commodity  associations.  All  leaders 
in  co-operative  work  in  California  no  matter  how  much  they 
differ  on  other  points,  are  agreed  that  this  is  absolutely  essen- 
tial. 

"2.  The  associations  have  an  absolute  binding  contract 
with  every  producer  who  belongs,  requiring  him  to  market 
all  his  products  through  the  association  over  a  period  of 
years.  A  California  co-operative  organization  would  no 
more  think  of  starting  now  without  this  provision  than  it 
would  of  leaving  its  safe  unlocked  at  night.  The  wisdom 
of  years  of  experience  in  co-operation  in  California  has 
burned  the  necessity  of  this  provision  into  the  very  soul  of 
co-operative  enterprises. 

"3.  Crops  are  handled  on  the  pool  basis,  thereby  giving 
every  producer  the  same  price  for  the  same  quality  product, 
no  matter  when  sold.  This  rule,  with  little  variation,  is  in 
effect  in  practically  every  co-operative  organization  in  Cali- 
fornia. It  is  the  basis  of  true  co-operation,  and  the  wisdom 
and  fairness  of  this  provision  have  been  proved  through  the 
years. 

"4.  Organizations  are  without  capital  stock  and  operate 
on  the  non-profit  plan.  Most  of  the  California  co-operative 
associations  are  operating  on  the  non-profit  plan  with  no 
capital  stock  and  others  are  rapidly  changing  to  this  plan 
or  are  endeavoring  to  do  so." 

PROGRESS  AMONG  OTHER  GROWERS  OF 
SPECIALTIES 

IN  the  last  ten  years  there  has  been  a  marked  development 
among  the  citrus  growers  of  Florida.  In  1909  a  group 
of  fifty  Florida  Growers  visited  California  to  study  the 
organizations  which  the  California  farmers  had  built  up. 
The  plan  of  organization  in  the  South  is  somewhat  similar 
to  that  of  the  California  Fruit  Growers'  Exchange,  including 
the  non-stock  feature.  The  Florida  Citrus  Exchange  is  a 
federation  of  twelve  sub-exchanges,  which  in  turn  are  made 
up  of  about  one  hundred  local  associations.  The  function 
of  the  three  organizations  is  the  same  as  in  the  California 
Fruit  Growers'  Exchange.  The  associations  are  without 
capital  stock,  are  on  the  non-profit  plan,  and  each  acts  as  the 
servant  of  the  growers.     Over  four  thousand  farmers  are 


10 


Pacemakers   in  Farmers    Co-operation 


banded  together  and  are  doing  a  constantly  increasing  busi- 
ness. For  the  year  of  1921  they  sold  over  4,000,000  boxes  of 
oranges  and  grape  fruit.  This  was  65%  of  the  citrus  fruit 
grown  in  the  state.  The  Exchange  spends  a  quarter  of  a 
million  dollars  a  year  for  advertising.  It  has  two  subsidiary 
companies,  one  through  which  the  growers  buy  annually 
several  million  dollars'  worth  of  supplies,  the  other  a  loan 
and  guaranty  company  which  lends  money  to  the  grower  to 
help  him  produce  his  crop,  or  to  enable  him  to  carry  it  until 
the  exchange  has  sold  it.  The  exchange  also  owns  its  own 
fertilizer  and  box  factories. 

In  Florida  large  celery,  berry  and  vegetable  associations 
are  being  formed.  The  Michigan  Potato  Growers'  Exchange 
was  organized  with  the  same  methods  as  the  California 
citrus  fruit  growers,  except  that  the  central  exchange  has 
more  authority.  In  1920  this  recently  formed  organization 
marketed  3,150  carloads  of  potatoes,  or  more  than  half  of 
the  Michigan  crop.  In  Southern  Michigan  there  is  a  Fruit 
Growers'  Exchange,  made  up  of  fourteen  local  associations, 
which  sold  a  million  dollars'  worth  of  fruit  in  1921.  Four 
thousand  carloads  of  various  truck  crops  were  sold  last  year 
by  the  South  Carolina  Produce  Association.  The  asparagus 
growers  of  this  state  are  organized  and  last  year  disposed  of 
one  hundred  carloads  of  their  product.  The  Arkansas  Rice 
Growers'  Co-operative  Association  has  "signed  up"  over  90% 
of  the  rice  acreage  of  the  state.  In  1920  $1,000,000  worth 
of  grapes  went  through  the  Chautauqua  and  Erie  Grape 
Growers'  Association,  operating  in  Western  New  York  and 
Pennsylvania.  In  Georgia  the  Peach  Growers'  Exchange 
handles  7,500  carloads  of  peaches  a  year.  747  carloads 
of  watermelons  were  sold  in  1921  by  the  Southwest  Georgia 
Melon  Growers'  Association.  In  New  York  state  several 
thousand  maple  growers  have  organized,  and  they  expect  to 
have  at  least  ten  thousand  members.  In  the  Hood  River 
Valley  of  Oregon  there  has  been  since  1914  the  well-known 
Apple  Growers'  Association.  Through  it  pass  about  75% 
of  the  apples  grown  in  the  section.  At  Hood  River  the  As- 
sociation operates  a  half-million  dollar  storage  and  refriger- 
ating plant.  It  has  branches  in  four  cities  and  sells  through 
brokers  in  other  large  centers.  $30,000  a  year  is  spent  for 
advertising.  Farmers  in  Alabama  were  struggling  with  the 
production  of  the  Satsuma,  a  small  Japanese  orange  of  the 
same  family  as  the  tangerine,  from  1908  to  1914,  when  five 
growers  formed  the  Gulf  Coast  Citrus  Exchange.  Now  the 
co-operative  has  five  hundred  growers  as  members,  and  in 
1920  it  marketed  a  quarter  of  a  million  dollars'  worth  of 
oranges  under  three  brands.  There  are  eight  local  associa- 
tions with  eight  plants  for  sorting,  grading  and  packing 
fruit.  The  Exchange  takes  six  cents  out  of  every  dollar 
received  for  its  operating  expenses. 

MARKETING  GRAIN 

IN  Northern  Idaho,  Eastern  Oregon,  Eastern  Washington 
and  Montana,  the  North  Western  Wheat  Growers'  As- 
sociation has  20,000,000  bushels  of  wheat  under  contract 
for  the  1922  season.  There  are  sub-organizations  in  each  of 
these  states.  The  co-operative  has  gone  through  three  suc- 
cessful years.  The  growers'  association  was  founded  with- 
out capital  stock,  on  the  one-man  one-vote  plan,  and  in  order 
to  build  warehouses  and  elevators  a  subsidiary  warehousing 
corporation  has  been  formed.  The  common  and  voting  stock 
in  the  subsidiary  is  held  by  the  directors  of  the  grain  grow- 
ers' association,  who  are  thus  placed  in  full  control.  The 
warehousing  corporation  must  do  the  work  of  marketing  at 
cost.  The  preferred  stock  is  sold  to  anyone  willing  to  buy, 
and  pays  8%  cumulative  dividends.  The  holder  of  the  pre- 
ferred stock  has  no  voice  in  the  transactions  of  the  company, 
unless  dividends  should  not  be  paid  for  two  successive  years. 


A  binding  contract  is  held  by  the  association  with  each 
grower;  he  agrees  to  deliver  all  wheat  for  a  period  of  six 
years.  A  grower  who  violates  the  terms  of  the  contract 
must  stand  all  costs  of  suit  and  pay  to  the  association  a 
penalty  of  twenty-cents  per  bushel  for  all  wheat  marketed 
through  other  channels. 

Thus  formation  of  five  thousand  local  grain  elevators  is 
but  the  first  step  of  the  grain  growers.  The  small  grain 
elevator  association  eliminates  one  middleman,  the  local 
dealer,  and  gives  to  the  farmer  a  few  other  marketing  ad- 
vantages. But  the  saving  is  simply  in  reducing  local  hand- 
ling costs  and  in  taking  the  dealer's  profits.  Most  co-opera- 
tive elevators  sell  to  the  brokers  on  the  city  board  of  trade 
as  do  their  private  local  competitors.  The  next  step  is  to 
eliminate  the  broker  and  the  speculator,  and  to  form  asso- 
ciations of  the  local  grain  co-operatives.  These  associations 
carry  on  business  in  the  marketing  centers  and  compete  with 
the  brokers.  In  October,  1920,  the  Michigan  Farmers'  Ele- 
vator Exchange  was  formed,  with  twenty-three  affiliated  lo- 
cal co-operative  elevators.  It  is  a  central  selling  agency, 
following  to  some  extent  the  principles  of  the  California 
Fruit  Growers'  Exchange.  In  late  1921  one  hundred  of  the 
state's  one  hundred  and  seventy-five  co-operative  elevators 
were  members,  and  the  Exchange  was  handling  25%  of  the 
grain,  hay  and  beans  leaving  the  farms  of  Michigan.  In 
Cleveland,  Ohio,  there  is  a  co-operative  grain  elevator,  with 
a  capacity  of  300,000  bushels.  Another  conspicuous  example 
is  the  Equity  Co-operative  Exchange,  with  headquarters  in 
St.  Paul,  and  with  seventy-five  branch  elevators  under  its 
control.  This  is  a  line  elevator  system,  the  central  agency 
operating  the  local  elevators.  The  organization  started  in 
1908,  on  paper,  and  struggled  along  until  1915,  when  it  had  a 
paid  up  capital  of  $45,000  and  a  debt  of  $95,000.  But  in  1920 
the  company  had  a  paid  up  capital  of  $1,550,000  and  since 
1916,  after  the  construction  of  the  terminal  elevator,  divi- 
dends of  8%  on  stock  have  been  paid.  All  stockholders  have 
one  vote,  and  no  one  man  holds  more  than  twenty  shares. 
The  Exchange  did  a  grain  business  worth  $20,000,00  in  1920. 

ALL  the  plans  of  marketing  grain  through  associations 
of  local  co-operatives  have  culminated  in  the  recom- 
mendations of  the  Committee  of  Seventeen  of  the 
American  Farm  Bureau  Federation  which  were  put  into 
effect  in  1921.  The  Farm  Bureau  Federation  itself  has  a 
million  and  a  quarter  members,  and  aims  to  become  the 
servant  of  other  marketing  organizations,  especially  in  aiding 
in  the  formation  of  co-operative  marketing  associations,  by 
commodity.  Its  Committee  of  Seventeen  was  made  up  of 
representatives  of  the  main  farmers'  bodies  and  the  previous 
associations  of  local  grain  elevators.  The  United  States 
Grain  Growers'  Association,  Inc.,  with  its  projected  $100,- 
000,000  Farmers'  Finance  Corporation,  is  the  result.  The 
Growers'  Association  is  to  be  a  non-stock,  non-profit  organi- 
zation. Under  its  powers  it  can  establish  numerous  sub- 
sidiary corporations  and  hold  their  stock,  as  that  of  the 
Finance  Corporation.  United  States  Grain  Growers,  Inc., 
is  to  be  a  sales  agency  for  the  local  co-operative  elevators 
of  the  Grain  Belt.  The  central  agency  will  agree  to  sell  the 
grain  of  the  local  association  for  a  period  of  five  years.  There 
is  no  compulsory  pool  for  the  local  grower;  in  fact,  he  has 
a  choice  of  five  methods:  he  may:  (1)  sell  to  the  local  co- 
operative elevator  for  the  current  market  price  and  thus 
end  the  transaction;  (2)  consign  to  the  national  agency  at 
the  various  terminals,  through  the  local  co-operative.  In  this 
case  the  central  agency  acts  merely  as  a  handling  agent  and 
sells  the  grain  at  the  market  price  at  its  discretion  or  when- 
ever ordered  to  sell  by  the  owner;  (3)  pool  his  grain  with  his 
neighbors  and  take  the  average  price  of  all  the  grain  in  the 
pool;  (4)  agree  to  combine  his  local  pool  in  a  joint  pool  with 


Pacemakers   in   Farmers'   Co-operation 


11 


other  local  pools  to  be  marketed  by  the  central  agency;  (5) 
pool  one-third  of  his  grain  in  a  national  pool  to  be  marketed  by 
the  national  agency  in  the  United  States  or  abroad.  The 
grower  pays  a  ten  dollar  membership  fee,  when  the  contract 
is  signed,  then  the  expenses  of  handling  the  grain.  One  per 
cent  of  the  total  receipts  may  also  be  deducted  by  the  national 
selling  agency  for  the  buying  of  equipment  and  retiring  obli- 
gations. Eventually,  the  Growers'  Association  desires  to  own 
all  the  equipment  necessary  for  marketing  grain.  Only  farm- 
ers can  secure  membership  in  the  parent  organization. 

Briefly,  this  plan  is  to  prevent  speculation,  to  stabilize 
prices,  not  to  fix  them,  to  study  marketing  conditions,  to  ship 
regularly  over  the  entire  year  rather  than  during  three 
months  as  has  formerly  been  the  case.  A  big  advantage  will 
lie  in  the  fact  that  the  selling  agency  will  eliminate  another 
middleman,  and  will  sell  grain  to  the  miller  and  exporter. 
While  the  Grain  Growers'  Association  hopes  to  control  a  large 
amount  of  the  grain  marketed  in  the  country,  it  is  not  seeking 
a  monopoly.  It  realizes  it  cannot  fix  prices,  particularly 
because  of  the  competition  with  foreign  grain,  including  that 
of  Canada,  where  the  wheat  growers  are  co-operatively  or- 
ganized. It  can  accomplish  no  miracles,  and  in  the  immedi- 
ate future  may  not  greatly  remedy  conditions.  But  after  a 
while  it  may  lower  the  prices  in  the  retail  market  and  at 
the  same  time  by  becoming  an  economical  middleman  it 
expects  to  secure  a  larger  return  to  the  wheat  grower.  On 
the  whole  it  is  the  most  ambitious  co-operative  venture  that 
the  farmers  in  this  or  any  other  county  have  ever  launched. 

In  January,  1922,  1,000,000,000  bushels  of  grain  were  un- 
der contract,  but  by  September  little  progress  had  been  made 
in  marketing  grain  for  the  farmer.  The  original  officers  and 
directors  resigned,  after  having  incurred  an  indebtedness  of 
$285,2&7.  The  largest  creditors  of  U.  S.  Grain  Growers  are 
several  midwestern  state  farm  bureaus  and  these  are  natu- 
rally represented  on  the  committee  of  reorganization.  If  this 
committee  on  reorganization  can  satisfy  the  creditors  and 
can  set  up  a  sales  organization  to  market  some  1922  grain, 
then  success  may  still  come.  The  result,  however,  is  doubtful 
and  the  grain  men  may  have  to  begin  over  again. 

Another  large  federation  of  wheat  growers  looms  up  in 
the  West.  Plans  are  projected  to  form  by  federation  of 
various  large  organizations  the  American  Wheat  Growers' 
Association.  In  the  spring  of  1921,  these  bodies  are  said  to 
have  75,000,000  bushels  of  wheat  under  contract  on  the 
compulsory  pooling  plan.  (This  was  not  adopted  by  the 
United  States  Grain  Growers.)  The  organizations  to  be 
merged  into  this  new  federation  had  a  total  of  35,000  mem- 
bers in  two  large  co-operatives:  (1)  the  Northwest  Wheat 
Growers'  Association,  with  its  organizations  in  Washington, 
Oregon,  Idaho  and  Montana  (previously  described)  and  (2) 
the  National  Wheat  Growers'  Association,  made  up  of 
branches  in  Oklahoma,  Kansas  and  North  Dakota,  with  or- 
ganizations in  process  in  Colorado,  Nebraska  and  Texas.  This 
new  organization,  by  membership  campaigns,  hopes  to  have 
50,000  members  by  the  1922  harvest,  and  to  market  about 
12%  of  the  country's  wheat  crop. 

•  LIVESTOCK  SHIPPING 

WITH  the  development  of  three  or  four  thousand  local 
livestock  shipping  associations  have  come  farmers' 
commission  firms  in  various  midwestern  cities.  The 
packing  plant  itself  is  the  goal  of  the  co-operating  livestock 
shipper.  The  local  associations  save  costs  in  the  marketing 
process  by  eliminating  the  local  buyer.  But  when  the  farm- 
ers take  the  important  second  step  and  themselves  operate 
a  city  commission  firm,  they  are  able  to  take  their  stock 
to  the  door  of  the  packing  plant  with  their  own  agencies. 
In  early  1921  there  were  seven  city  firms  in  operation.     The 


Equity  Co-operative  Exchange  had  houses  in  Chicago  and 
South  St.  Paul.  The  Farmers'  Union  of  Kansas  operated 
firms  in  Kansas  City,  the  Union  in  Colorado  had  a  house  in 
Denver,  and  the  Union  in  Nebraska  had  organizations  at 
Solith  Omaha,  St.  Joseph,  and  Sioux  City.  The  number  of 
farmer-owned  livestock  commission  houses  will  undoubtedly 
be  increased  in  1922. 

The  Farmers'  Union  Livestock  Commission  of  Nebraska, 
which  is  a  part  of  the  state  farmers'  union,  began  business 
in  1917  without  selling  stock  and  with  $2,000  of  borrowed 
money.  It  has  become  an  outstanding  success.  Through  its 
three  branches  at  the  Omaha,  St.  Joseph  and  Sioux  City 
markets  it  sold  in  1920  nearly  seven  hundred  thousand  head 
of  livestock  and  returned  to  its  patrons  savings  of  $100,000. 
One  local  shipping  association  received  in  1919  a  check  for 
$1,224  as  its  patronage  dividend. 

The  Committee  of  Fifteen  appointed  by  the  American 
Farm  Bureau  Federation  to  study  the  marketing  of  livestock, 
worked  ten  months  and.  formulated  a  plan  which  is  going  into 
effect  in  1922.  More  city  commission  firms  are  to  be  estab- 
lished, probably  in  St.  Louis,  Chicago,  Cincinnati,  Detroit, 
Buffalo,  Pittsburgh  and  other  points.  At  each  city  a  co- 
operative is  formed  by  selling  memberships  at  $10  each  to 
individual  livestock  shippers  and  $50  each  to  local  associa- 
tions.    Patronage  dividends  will  be  returned. 

The  Committee  also  outlined  its  greater  task,  which  is  to 
be  taken  up  after  the  commission  firms  have  been  made  a 
success.  This  task  is  to  co-ordinate  the  efforts  of  all  the  asso- 
ciations, to  secure  orderly  marketing.  This  would  mean  close 
co-operation,  which  would,  among  other  things,  enable  the 
individual  farmer  or  the  local  shipping  association  to  use  the 
facilities  of  more  than  one  commission  firm  when  possible. 

COTTON   AND    TOBACCO    ASSOCIATIONS 

IT  was  long  thought  that  the  cotton  growers  could  not  be 
organized,  but  recent  news  from  parts  of  the  South  tells 
a  different  story.  Out  of  114  local  co-operative  cotton 
gins  formed  since  1910  in  Oklahoma,  only  fourteen  are  left 
in  1921.  Great  opposition  and  lack  of  knowledge  put  them 
out  of  business.  Still,  though  co-operation  had  such  a  "black 
eye,"  word  came  in  the  fall  of  1921  that  the  Oklahoma  Cot- 
ton Growers'  Association  had  signed  up  its  400,000th  bale. 
When  formed  it  had  the  endorsement  of  the  Oklahoma  Bank- 
ers' Association,  the  Governor,  the  State  Board  of  Agricul- 
ture and  the  agricultural  college.  It  has  no  capital  stock, 
its  capital  being  the  cotton  signed  up  from  the  growers  on  a 
seven-year  compulsory  contract,  though  it  charges  a  ten 
dollar  admission  fee.  It  will  be  a  sales  agency  on  the  non- 
profit basis.  A  large  warehouse  corporation  is  necessary, 
control  of  which  is  to  be  vested  in  the  co-operative  cotton 
growers'  association  through  common  stock.  The  preferred 
stock  is  sold  to  build  equipment,  and  the  plan  of  the  associa- 
tion is  to  retire  a  small  amount  of  the  preferred  stock  of  the 
warehousing  company  each  year,  so  that  eventually  the 
cotton  growers  themselves  will  have  full  control.  The  real 
impetus  for  such  an  organization  came  when  a  few  leading 
growers  in  the  state  attended  a  meeting  at  Montgomery, 
Alabama,  in  May  1920.  One  of  the  speakers  told  of  success 
in  co-operative  commodity  marketing  in  California.  The 
Oklahoma  men  went  home  thinking  hard  about  their  own  big 
problems  in  marketing  one  of  the  least  perishable  products 
in  the  country.  They  began  to  believe  that  what  real  co- 
operation had  done  in  California  in  handling  perishable 
products  it  could  do  in  Oklahoma  for  cotton.  In  June,  1920, 
a  meeting  was  held  attended  by  representatives  from  thirty- 
two  of  the  fifty-three  cotton  producing  counties.  They  drew 
up  their  contract  and  began  to  employ  field  organizers.  The 
$10  membership  fee  paid  the  expenses  of  organization  and 
left  a  small  surplus.     The  county  agents  aided  in  forming 


12 


Pacemakers   in  Farmers'   Co-operation 


organization  committees  in  every  county,  paving  the  way 
for  the  work  of  the  field  men.  One  county,  McClain,  signed 
up  for  98%  of  its  crop.  Thirteen  other  counties  signed  up 
for  more  than  60%  of  their  product.  Some  towns  boast  that 
the  street  buyer  of  cotton  has  been  altogether  driven  out. 
Local  associations  have  been  formed  by  school  districts. 

The  Oklahoma  Association  has  been  successful  in  securing 
a  loan  from  the  War  Finance  Corporation  to  aid  in  selling 
cotton  for  export.  The  Texas  growers  are  organized  on  the 
"Oklahoma  plan"  and  were  handling,  in  1921,  200,000  bales. 
They  too  have  secured  an  export  loan  from  the  War  Finance 
Corporation,  as  has  the  Staple  Cotton  Co-operative  Asso- 
ciation of  Mississippi,  to  finance  the  exporting  of  100,000 
bales  of  long  staple  cotton.  The  Arizona  Co-operative  Cot- 
ton Growers'  Association  also  received  the  same  kind  of  a 
loan  in  August,  1921.  About  half  the  market  value  of  cotton 
is  advanced  to  the  co-operatives,  that  they  may  hold  the 
cotton  in  warehouses  and  proceed  to  organize  for  sales.  The 
money  is  advanced  for  a  maximum  period  of  one  year.  Or- 
ganizations are  also  being  started  in  New  Mexico,  North 
Carolina,  Arkansas  and  California.  They  are  already  banded 
in  the  American  Cotton  Growers'  Exchange  with  80,000 
growers  as  members.  The  state  organizations  handled  10% 
of  the  country's  1921  cotton  crop. 

During  1921-22  there  has  been  great  activity  along  the 
tobacco  growers.  More  than  55,000  growers  of  "Burley" 
tobacco  in  Kentucky  have  signed  contracts  to  deliver  their 
crop  for  five  years  to  the  Burley  Tobacco  Growers'  Co- 
operative Association  at  Lexington.  In  Virginia  and  the 
Carolinas,  68,000  growers  of  "Bright"  tobacco  have  signed 
similar  contracts  as  members  of  the  Tristate  Tobacco  Grow- 
ers' Co-operative  Association.  More  than  85%  of  the  "Bur- 
ley" crop  and  70%  of  the  "Bright'-'  products  may  be  co- 
operatively stored,  graded  and  sold  in  1922.  The  Kentucky 
organization  was  financed  (1)  with  what  was  saved  from  the 
$5  membership  fee  after  the  preliminary  organization  and 
the  membership  campaign  costs,  (2)  a  substantial  loan  of 
$5,400,000  from  banks  in  the  section,  and  (3)  a  $10,000,000 
advance  against  warehouse  receipts  from  the  War  Finance 
Corporation.  These  loans  enabled  the  association  to  pay 
to  each  grower  half  the  value  of  the  tobacco  when  he  delivered 
it  to  the  co-operative's  warehouse.  Through  lease  or  pur- 
chase, the  organization  has  the  use  of  warehouses  worth 
$6,000,000.  Tobacco  is  carefully  graded,  packed  and  sold  by 
the  association  for  the  grower.  The  area  organized  has  been 
divided  into  a  number  of  districts.  Several  large  sales  in  the 
early  days  of  the  organization  have  given  added  impetus  to 
an   unusually  enthusias.tic   organization. 

DAIRYMEN'S  ASSOCIATIONS 

ALSO  outstanding  among  the  achievements  in  co-opera- 
tion are  those  of  the  dairymen  in  various  sections. 
In  1912  a  group  of  Sheboygan  County,  Wisconsin, 
farmers  engaged  in  producing  American  cheese,  became  dis- 
gusted with  the  deliberations  of  the  Plymouth  Cheese  Board 
in  fixing  prices.  The  charge  was  that  there  was  no  fair 
competition  in  the  method.  From  the  summer  of  1912  to  that 
of  1913  efforts  were  made  to  remedy  conditions.  Forty-five 
local  co-operative  cheese  factories  were  formed  under  the 
co-operative  law  of  the  state  and  they  banded  themselves 
together  in  the  Wisconsin  Cheese  Producers'  Federation. 
This  was  their  selling  agency.  Its  capital  stock  was  only 
$2,000.00.  Shares  sold  for  $10  each  and  the  local  association 
operating  the  factory  was  allowed  to  hold  not  more  than 
three.  The  warehouse  and  .storage  company,  while  controlled 
largely  by  the  men  in  the  federation,  was  a  separate  organi- 
zation. The  Federation,  the  farmers'  middlemen,  put  sales- 
men on  the  road,  and  has  from  the  beginning  been  successful. 


though  it  has  had  terrific  competition  and  a  very  strenuous 
life.  Only  the  sacrifices  of  the  managers  have  kept  the  en- 
terprise alive  through  the  worst  periods.  Cheese  is  now 
shipped  to  thirty-seven  states;  various  brands  have  been 
standardized;  and  the  total  volume  of  cheese  handled  in- 
creased from  6,125,480  pounds  in  1914  to  14,088,021  pounds 
in  1919.  The  value  of  cheese  received  from  and  sold  for  the 
local  factories  increased  from  $855,328.64  in  1914  to  $4,- 
243,938.56  in  1919.  The  number  of  local  factories  doing 
business  through  the  federation  increased  from  forty-five 
in  1914  to  129  in  1919.  Three  thousand  farmers  are  engaged 
in  this  enterprise.  The  selling  costs  have  been  extremely 
low  and  have  constantly  diminished  as  the  volume  of  busi- 
ness increased.  Though  the  Wisconsin  farmer  pays  his  local 
cheese  maker  four  cents  out  of  every  dollar  received  and 
pays  8.3  cents  out  of  every  dollar  received  for  cheese  for 
all  the  local  expenses  of  the  cheese  factory,  the  Wisconsin 
Cheese  Producers'  Federation  has  taken  only  1.4  cents  out 
of  every  dollar  received  for  all  selling  expenses  and  only  two- 
fifths  of  one-tenth  cent  out  of  every  dollar  has  gone  for  the 
salaries  of  managers.  This  low  selling  cost  compares  very 
favorably  with  the  remarkable  record  of  the  California  Fruit 
Growers'  Exchange.  The  Federation  does  not  buy  the  cheese 
from  the  local  factories,  nor  does  it  pay  dividends.  It  sells 
cheese  for  them  and  monthly  sends  each  local  factory  the 
proceeds  of  sales,  less  the  Federation's  cost.  Thus  it  is  able 
to  run  on  such  small  capital.  The  advantages  for  the  farme:f 
have  been  in  reduced  selling  costs  and  in  eliminating  one  or 
two  middlemen.  In  1921  a  federation  of  cheese  factories  en- 
gaged in  making  Swiss  and  Limburger  varieties  was  formed 
in  Wisconsin  along  similar  lines  to  the  Federation  selling 
American  brands  at  Plymouth.  In  Minnesota,  in  1920,  thirty 
co-operative  cheese  factories  organized  the  Minnesota  Cheese 
Producers'  Association,  with  a  capital  stock  of  $25,000.  In 
1922  the  number  of  factories  as  members  had  grown  to  three 
hundred  and  ten.  The  first  duties  of  this  federation  are  to 
grade,  pack  and  standardize  products.  This  accomplished 
among  the  factories,  the  central  agency  will  become  a  selling 
organization. 

IN  the  field  of  marketing  whole  milk  there  is  a  growing 
list  of  federations  of  local  co-operatives,  or  large  organi- 
zations without  locals,  centering  around  large  cities  such 
as  Boston,  New  York,  Philadelphia,  Pittsburgh,  Chicago, 
Des  Moines,  Milwaukee,  Detroit,  Portland,  Oregon,  and  the 
twin  cities  of  Minneapolis  and  St.  Paul.  Some  of  the  or- 
ganizations also  supply  milk  to  smaller  cities  in  their  regions. 
The  work  of  all  of  these  is  vividly  described  in  the  Source 
Book  of  Co-operative  Marketing  of  Dairy  Products  contain- 
ing the  report  of  the  National  Dairy  Marketing  Conference 
held  in  Chicago  May  3  and  4,  1921,  at  the  call  of  the  Co- 
operative Marketing  Department  of  the  American  Farm 
Bureau  Federation.  This  report  gives  the  plans  of  a  num- 
ber of  co-operatives,  mostly  those  handling  whole  milk,  from 
the  addresses  of  officials  of  the  organizations. 

For  instance,  the  New  York  Dairymen's  League,  Inc., 
reached  a  total  of  93,000  members,  with  at  least  70,000  pro- 
ducing milk,  at  the  end  of  1920.  It  was  organized  in  1907, 
incorporated  in  1909,  but  did  not  operate  on  a  large  scale 
until  1916.  Since  1909  about  23,000  farmers  who  no  longer 
produced  milk  have  kept  a  nominal  membership  in  the 
League.  There  were  1,112  local  organizations  in  six  states, 
the  big  majority  being  in  New  York.  Since  1916  it  has  been 
much  heard  of  as  a  powerful  factor  in  the  wholesale  milk 
market.  It  transports  milk  from  as  great  a  distance  as  500 
miles.  Three-fourths  of  the  milk  received  goes  into  the  city 
for  fluid  consumption;  the  remaining  one-fourth  is  manu- 
factured, being  sold  mainly  to  condenseries.     As  the  Dairy- 


Pacemakers   in  Farmers'  Co-operation 


13 


men's  League  was  incorporated  it  was  solely  a  bargaining 
agency  acting  for  the  local  farmers'  organizations  in  their 
dealings  with  the  city  milk  distributors.  It  did  not  collect 
money  for  the  farmers  but  received  from  them  one  cent  per 
hundred  pounds  of  milk  sold.  The  locals  of  the  New  York 
Dairymen's  League  also  mostly  delivered  their  milk  to  plants 
owned  by  the  city  milk  distributors  at  the  country  stations. 
After  operating  from  1916  to  1920  it  became  necessary, 
especially  because  of  difficulties  in  disposing  of  surplus  milk 
to  condenseries,  to  reorganize  so  as  to  give  the  central 
agency  full  powers  as  marketing  agent.  It  was  to  collect  the 
money  for  sales  and  make  as  uniform  as  possible  a  return  to 
the  locals.  New  contracts  were  circulated  among  the  pro- 
ducers and  in  1922  the  Dairymen's  Co-operative  Association, 
Inc.,  began  to  operate,  with  50,000  out  of  the  70,000  producing 
members  of  the  old  League.  20,000  producers  of  the  League 
have  not  signed  the  new  contract.  It  is  doing  a  business  of 
$6,000,000  a  month.  The  Dairymen's  League  as  such  will 
not  desert  the  20,000  farmers  who  have  not  entered  the  new 
organizatioii,  but  it  is  thought  that  soon  the  old  organization 
will  cease  to  operate. 

Prominent  among  these  co-operatives  are  also  the  New 
England  Milk  Producers'  Association  organized  on  the  non- 
stock plan,  with  559  local  units  comprising  24,000  members. 
The  central  agency  as  sales  agent  receives  one-half  of  one 
per  cent  of  the  amount  received  for  milk  or  other  milk  prod- 
ucts. The  Associated  Dairymen  of  California  has  the  usual 
non-stock,  non-profit  plan,  with  the  subsidiary  corporations 
for  erecting  and  operating  distributing  plants  and  factories, 
with  the  binding  contract  and  a  $10  membership  fee.  A  sim- 
ple plan  is  worked  by  the  Interstate  Dairymen's  Association 
of  Philadelphia,  which  acts  as  sales  agent  for  15,000  dairy- 
men, receiving  one  cent  per  hundred  pounds  for  milk  sold. 


OTHER  federations,  combinations  or  large  organizations 
might  be  described.  Some  of  the  very  recently  organ- 
ized are  mentioned  in  Chapter  IV.  Of  the  265  na- 
tional, 143  interstate  and  1,761  state  agricultural  organiza- 
tions, mentioned  in  the  1920  list  of  the  Department  of  Agri- 
culture, approximately  300  are  buying  or  selling  associations. 
There  is  variety  in  the  plans  of  the  central  agencies  discussed 
in  this  chapter,  but  for  most  of  those  mentioned  the  methods 
may  be  thus  summarized. 

1.  The  local  association  of  the  individual  has  a  large 
measure  of  control.  Systems  of  local  and  district  represen- 
tation in  the  central  agency  are  mostly  framed  to  keep  the 
producer  close  to  control.  The  local  group  or  the  individual 
usually  has  the  same  powers  in  the  central  agency  as  the 
individual  has  in  the  local  enterprise. 

2.  The  capital  stock  of  the  central  agency  is  made  as 
small  as  practicable,  and  the  local  associations  or  individuals 
take  a  limited  number  of  shares.  Or,  as  seems  to  be  the 
most  popular  method,  no  stock  is  sold,  the  farmer  holds  a 
membership,  and  contracted  products  become  the  capital  of 
the  organization.  One-man  one-vote  is  the  rule  in  a  majority 
of  cases. 

3.  In  marketing  some  commodities,  a  subsidiary  or  aux- 
iliary company  is  formed  to  do  the  work  of  the  parent  or- 
ganization. "This  is  financed  by  preferred  and  non-voting 
stock.  The  common  and  voting  stock  is  held  by  the  parent 
company.  This  preferred  stock  is  retired  as  soon  as  possible 
to  give  entire  control  to  the  agrricultural  interests. 

4.  Savings  and  Dividends  are  most  frequently  distributed 
to  the  farmers  or  the  local  associations  according  to  the 
amount  of  business  they  have  transacted  with  the  central 
agency.  Or,  no  savings  or  dividends  are  sought  for,  the 
central  agency  merely  serving  as  a  more  economical  middle- 
man, receiving  only  its  own  costs.  The  savingrs  come  in  the 
form  of  higher  current  income. 

4.  In  many  cases  the  central  organization  has  a  binding 
contract  with  the  producer.  Crops  are  frequently  pooled, 
thus  giving  each  producer  an  equal  price  for  the  same  grade 
or  quality  of  products. 


Chapter  IV.    Achievements,  Problems,  The  Future 

(CONCLUSION) 


THE  theory  of  my  recommendations,"  writes  Mr.  Bernard 
M.  Baruch,  in  an  open  letter  to  the  Secretary  of  the 
Kansas  State  Board  of  Agriculture,  "is  that,  in  the 
marketing  of  his  products,  the  producer  must  be  placed  on 
a  footing  of  equal  opportunity  with  the  buyer."  To  achieve 
that  place  of  equal  opportunity  has  been  one  of  the  goals 
of  the  farmers  ever  since  they  began  to  give  attention  to  the 
problems  of  distribution.  They  are  nearer  achievement  to- 
day than  ever  before.  To  form  fifteen  thousand  local  co- 
operative organizations  and  several  hundred  federations  or 
large  co-operatives  is  a  remarkable  accomplishment.  Cer- 
tainly its  importance  is  not  exceeded  by  any  other  event  in 
American  agriculture. 

On  the  whole  the  farmers'  efforts  are  to  emphasize  demo- 
cratic control : — to  give  a  man  one  vote  regardless  of  the 
amount  of  stock  he  holds,  or  to  limit  the  amount  of  stock 
one  man  may  hold.  This  makes  their  organizations  rather 
cumbersome,  slow  to  act,  in  contrast  to  the  uncanny  speed 
of  the  centralized  industrial  corporation.  But  the  ideal  is 
to  exalt  individual  preference,  to  put  the  producer  in  full 
control.  The  farmers  have  gone  far  in  the  matter  of  "taking 
the  premium  out  of  capital,"  though  not  as  far  as  the  city 
consumer  co-operative  movement.  There  is  a  noticeable  ten- 
dency to  form  new  organizations  with  the  policy  of  patronage 
dividends,  and  half  of  the  grain  elevators  in  the  state  of 
Iowa  are  reported  to  have  gone  over  to  this  plan  in  the  past 
few  years.  Out  of  1,208  local  co-operative  grain  elevators 
investigated   by   the    federal    trade   commission    in    1919-20 


67.62%  distributed  dividends  by  patronage.  The  latest  re- 
ports of  this  commission — for  the  crop  year  1919-20 — state 
that  farmers'  elevators  paying  patronage  dividends  made 
thirty-nine  per  cent  on  invested  capital.  Farmers'  elevators 
not  paying  patronage  dividends  returned  profits  of  twenty- 
six  per  cent.  The  independents  realized  twenty-three  per 
cent  and  the  line  elevators  eighteen  per  cent.  The  policy  of 
paying  patronage  dividends  leads  to  greater  returns  to  the 
growers.  The  report  for  1919-20  shows  greater  profits  for 
co-operatives  than  that  of  the  previous  year.  The  farmers 
have  a  great  body  of  experience  in  non-stock  organizations, 
and  with  the  great  forces  behind  them,  the  co-operatives  are 
able  to  start  with  the  money  realized  from  membership  fees 
and  the  capital  borrowed  with  contracts  for  products  as 
security.  The  non-profit-making  central  agencies,  or  federa- 
tions, serving  as  economical  middlemen,  deserve  heed  and 
study.  The  large  federations,  when  they  have  storage  and 
warehouse  facilities,  have  achieved  much  in  stabilizing  prices, 
in  so  far  as  this  is  possible.  This  is  one  of  the  big  ideals 
of  many  of  the  organizations  which  are  now  federating  and 
beginning  to  market  on  a  large  scale.  The  standard  of 
grading  and  sorting  products  has  been  raised.  Speculation 
in  some  products  has  been  done  away  with  by  the  methods 
of  the  federations.  Through  economical  distribution  and 
studying  of  marketing  conditions,  transportation  costs  have 
been  lowered.  In  many  sections  the  remarkable  prosperity 
of  the  farmers  is  due  directly  to  co-operation.  For  instance 
it  is  estimated  that  in  1921  among  co-operating  California 


14 


Pacemakers   in  Farmers'   Co-operation 


farmers  only  2%  carried  crop  mortgages.     This  is  a  very 
low  figure. 

The  trend  of  the  whole  farmers'  co-operative  movement 
has  not  been  to  wreck  or  wildly  eliminate  the  middleman. 
The  effort  is  to  supplant  the  privately  owned  middlemen 
agencies  with  the  farmers'  own.  In  a  word,  the  farmers 
are  changing  agencies  of  marketing,  while  continuing  to 
perform  the  fundamental  services  of  the  marketing  process. 
In  a  few  cases,  however,  as  in  that  of  the  Wisconsin  Cheese 
Producers'  Federation,  sometimes  from  two  to  four  middle- 
men have  been  eliminated  when  the  co-operative  sells  direct 
to  the  city  dealers.  But  in  the  main  the  effort  has  been  to 
take  over  the  work  of  the  country  handler  or  dealer  in  the 
selling  process,  and  then,  through  federation  of  local  co- 
operatives, the  work  of  the  broker,  wholesaler,  and  speculator. 
The  ideal  of  the  grain  growers,  for  instance,  is  to  supplant 
the  broker  and  to  sell  to  the  miller  and  exporter.  It  is 
hardly  possible  that  any  of  the  farmers'  organizations  will 
attempt  to  build  up  distributing  agencies  farther  along  the 
road  to  the  ultimate  consumer. 

Production  has  in  no  case  been  cut,  nor  an  unjust  monopoly 
been  sought  for.  Only  a  small  number  of  co-operatives  as- 
sert themselves  at  all  in  fixing  prices.  Several  California 
co-operatives,  controlling  a  large  proportion  of  a  special 
crop,  do  fix  prices  in  advance  of  their  selling  season  by  taking 
into  account  the  probable  workings  of  supply  and  demand. 
This  method  has  not  been  altogether  successful.  It  is  harder 
to  estimate  what  demand  will  be  than  to  adjust  price  to  de- 
mand when  it  asserts  itself  during  the  buying  season.  The 
Dairymen's  Associations  naturally  have  a  voice  in  bargain- 
ing, Ijut  price  fixing  of  milk  is  usually  done  now  with  three 
parties  present:  the  state  or  public,  the  city  milk  distributor 
or  dealer,  and  the  association  of  producers.  The  California 
Fruit  Growers,  the  Southern  Cotton  Growers  or  the  United 
States  Grain  Growers  could  not  attempt  to  regulate  prices, 
much  less  try  to  set  an  arbitrarily  high  price  on  their  prod- 
ucts. In  the  case  of  the  last  two  there  are  foreign  markets 
and  supplies  to  be  taken  into  consideration.  One  hears  of 
no  designs  to  exploit  the  consumer.  Instead  of  cutting  pro- 
duction and  exploiting  the  consumer  the  great  central  agen- 
cies have,  through  advertising  and  improved  selling  methods, 
enabled  the  farmers  to  secure  profitable  distribution  of  con- 
stantly enlarging  crops,  and  have  enlarged  consumption, 
whereas  under  the  old  system  the  large  crop  was  nearly 
always  a  financial  failure. 

The  day  of  experimenting  in  co-operative  marketing  is 
passing.  "The  old  mistakes  are  being  avoided.  At  the  head 
of  the  large  organizations  are  far-sighted,  trained  men, 
planning  in  a  scientific  way  to  market  products.  The  post- 
war period  has  brought  new  difficulties,  and  the  drop  of 
prices  caused  new  obstacles  to  loom  up,  but  the  co-operatives 
are  forging  sanely  and  bravely  ahead.  In  the  early  days  of 
the  Harding  administration  plans  were  being  made  by  the 
Secretary  of  Commerce  and  the  Secretary  of  Agriculture  for 
aiding  the  grain  producers  through  arranging  for  financial 
credits  and  providing  better  warehouses.  But  the  grain 
growers'  organizations  were  in  the  midst  of  plans  for  "self- 
help,"  and  were  not  interested.  Though  there  has  been  some 
call  for  government  relief,  the  co-operatives  with  their  tested 
organizations  are  relying  in  a  commendable  way  on  their 
own  agencies  to  "pull  them  through." 

Finally,  the  co-operative  agencies  have  given  the  farmer 
greater  prestige  as  a  political  factor.  The  farmers'  group  is 
added  to  the  so-called  capital  and  labor  groups  in  legisla- 
tive lobbies  and  halls,  and  this  new 
group  has  become  very  powerful. 
"Agriculture,"  says  part  of  a  resolution 
of  the  National  Dairy  Marketing  Con- 
ference held  in  May,  1921,  "neither 
asks  nor  demands  any  special  favors 
and  will  tolerate  no  unfair  discrimina- 
tion against  it,  for  the  benefit  of  other 
branches  of  industry."  A  review  of 
recent  national  legislation  passed  or 
that  pending  in  the  fall  of  1921  is 
rather  impressive :  the  emergency  credit 
bill  paving  the  way  for  larger  credits 
to  farmers;  the  packer  control  bill, 
placing  large  control  of  the  meat  pack- 
ing industry  into  the  hands  of  the  secre- 
tary of  agriculture;  the  futures  trading 
act,  further  regulating  grain  ex- 
changes, have  all  been  passed  after  be- 
ing urged  by  the  organized  farm- 
ers.       The     emergency     tariff      was 


largely  passed  under  pressure  from,  the  farming  states.  The 
farmers  are  also  in  back  of  bills  to  stimulate  road  building 
and  to  correct  certain  undesirable  features  in  Federal  Aid 
road  building  in  the  past.  The  voice  of  the  agricultural  bloc 
becomes  vehement  when  tax  measures  are  being  discussed, 
and  the  group  is  interested  in  other  measures  such  as  a  truth 
in  fabrics  bill. 

ON  the  other  hand,  there  are  many  problems  within  and 
without  the  organizations.  State  laws  are  sometimes 
barriers  to  the  type  of  co-operative  organizations  that 
the  farmers  want.  They  are  asking  for  the  removal  of  hin- 
drances to  the  kinds  of  organizations  they  wish  to  build,  and 
especially  those  to  compulsory  pooling.  Trained  managers 
are  hard  to  find,  though  the  agricultural  colleges  are  now 
turning  them  out.  Usually  one  of  the  natural  leaders  among 
the  farmers  is  made  the  manager  of  the  co-operative.  He  has 
enthusiasm,  makes  sacrifices  and  works  hard,  but  lacks  tech- 
nical training  in  keeping  proper  records  as  well  as  handling 
purchases  or  sales.  This  lack  of  trained  men  has  added  to 
the  hard  struggle  of  the  organizations.  Professor  John  R. 
Commons  says:  "We  have  had  enough  emotion  in  the  co- 
operative movement  of  our  country;  our  need  nov/  is,  above 
all,  trained  intellect." 

The  local  co-operative  sometimes  has  difficulty  in  retaining 
an  experienced  manager.  There  is  lack  of  vision  and  knowl- 
edge on  the  part  of  the  farmers  and  they  refuse  to  pay  a 
trained  man  what  his  services  are  worth.  The  lack  of  real 
"co-operative  spirit"  and  perseverance  are  great  hindrances, 
for  usually  the  co-operative  must  endure  under  great  stress 
and  handicaps,  with  little  promise  of  great  achievement  dur- 
ing the  first  few  months  of  the  first  few  years.  Sometimes 
the  very  men  who  are  members  of  the  organizations  are  the 
biggest  stumbling  blocks  on  the  road  to  progress.  Read  from 
an  article  by  a  manager:  "As  I  write  this,  I  have  letters  on 
my  desk  from  farmers  who  are  bitterly  complaining  because 
their  non-pooling  neighbors  received  more  money  for  May 
milk  than  they  received:  the  line  of  reasoning  is  that  the 
pool  lost  them  money.  Such  men  utterly  forget  that  were 
it  not  for  the  pool,  they  would  have  received,  as  they  did 
previous  to  1916  when  butter  and  cheese  prices  were  the  same 
as  at  present,  less  than  $1  per  hundred  pounds  (46  quarts) 
for  their  milk." 

Organizations  in  some  states  have  gone  on  under  too  high 
pressure.  Many  locals  fail  because  the  organizer  goes 
through  a  locality,  lays  an  inadequate  foundation,  does  not 
prepare  the  members  for  the  problems  they  are  about  to  meet. 
Failure  results.  If  the  organizing  agency  will  pay  more 
attention  to  an  adequate  follow-up,  more  local  organizations 
will  become  permanent.  There  has  not  been  enough  survey 
of  the  reasonable  amount  of  business  available,  for  without 
enough  volume  the  co-operative  cannot  live.  Co-operation 
must  really  save  money.  Dr.  E.  G.  Nourse,  Professor  of 
Agricultural  Economics  at  the  Iowa  State  College  of  Agri- 
culture says,  for  instance,  of  his  locality:  "Usually  a  hun- 
dred carloads  per  year  is  enough  business  for  a  livestock 
shipping  association  and  200,000  bushels  of  grain  a  year  for 
an  elevator."  But  he  recommends  500  to  1,000  cars  of  stock 
for  a  shipping  association  and  says  many  of  those  in  his  state 
must  expand,  combine  or  die.  He  goes  on  with  this  word  of 
warning:  "The  co-operative  marketing  of  livestock  in  Iowa 
has  great  possibilities  but  it  is  possible  that  one-fourth  of 
the  associations  formed  may  go  to  pieces  because  of  too  small 
a  volume  of  business,  inefficient  management,  or  lack  of  in- 


Wool  is  increasingly  pooled  in  many  sections  of  the  country 


Pacemakers   in  Farmers'   Co-operation 


15 


terest  on  the  part  of  the  members."  And  these  three  reasons 
for  failure  apply  also  to  other  regions  and  to  other  than  live- 
stock shipping  associations. 

THE  problems  without  the  movement  are  many.  There 
is  much  discrimination  and  antagonism  on  the  part  of 
the  organized  private  distributors.  The  Chicago  Board 
of  Trade  had  barred  the  really  co-operative  organizations 
until  forced  to  admit  them  by  Federal  legislation.  The  pri- 
vate Grain  Dealers'  National  Association  is  reported  to  have 
raised  $250,000  at  a  meeting  in  Cincinnati  in  1921,  for  the 
purpose  of  fighting  United  States  Grain  Growers  and  all 
farmers'  co-operative  grain  marketing  plans.  The  Grain 
Dealers  attack  co-operative  plans  by  circulating  a  pamphlet 
entitled  "Farming  the  Farmer,"  and  Grain  Growers  retort 
with  one  "Fooling  the  Farmer."  The  organized  private  dis- 
tributors do  not  merely  casually  doubt  the  success  of  the  co- 
operative marketing  plans.  Before  the  Committee  of  Fifteen 
studying  live  stock  marketing  had  time  to  report  to  the 
American  Farm  Bureau  Federation,  the  Chicago  Live  Stock 
Exchange  opened  fire.  The  farmers  have  often  been  accused 
of  striking  at  the  foundations  of  government,  when  they 
merely  tried  to  mend  a  ragged  distribution  system.  Through 
misrepresentations  they  have  lost  friends  or  have  been  pre- 
vented from  making  them,  especially  among  city  people. 
The  farmers  who  endeavor  to  strike  against  the  business 
men  in  the  smaller  towns  do  so  needlessly.  The  larger  cities 
contain  the  organized  distributors  who  are  fighting  the  farm- 
ers organizations.  This  antagonism  toward  co-operatives  is 
as  bad  today  as  at  any  other  time.  "It  is  hard  to  tell  who  is 
the  farmer's  enemy  and  who  is  his  friend,"  says  many  a  co- 
operative manager. 

There  are  difficulties  in  enlisting  outside  capital,  where 
this  is  necessary,  because  the  co-operative  organization  usu- 
ally wishes  to  be  democratic,  and  if  it  caters  too  much  to  the 
investor  in  forming  auxiliary  or  subsidiary  organizations,  it 
is  always  in  danger  of  losing  co-operative  features.  "The 
future  of  the  local  co-operatives  seems  to  be  closely  bound 
up,  too,  as  we  have  seen,  with  a  sound,  sane,  rounded  out, 
healthy  country  life.  Shifting  population,  lack  of  adequate 
community  or  social  organization,  lack  of  strong  organizing 
leadership,  have  played  a  part  in  limiting  the  spread  of  the 
local  organizations. 

There  are  two  other  large,  outstanding  problems.  (1) 
Relationships  between  large  farmers'  organizations.  "The 
splits  and  disagreements  that  occur  are  confusing  and  result 
mostly  in  weakening  the  whole  cause.  The  lessons  of  co- 
operation have  not  all  been  learned.  (2)  Difficulties  of  "In- 
tegration." It  is  comparatively  easy  to  get  a  closely  knit 
organization  with  uniform  contracts  and  plans  for  a  limited 
locality.  But  when  you  strike  the  corn  and  wheat  belts,  fed- 
eration or  integration  becomes  more  difficult.  There  are  more 
diverse  groups.      Starts   have   been   successfully   made   with 


Relations   between  farmers  and  business  men  are  in  many 
localities  little  disturbed  by  co-operative  organization 


differing  methods  of  organization.  It  is  a  big  task  to  har- 
monize these  into  one  smoothly  working  federation.  Greater 
distances  separating  locals  have  to  be  reckoned  with.  Even 
the  present  plans  for  the  grain  growers  may  not  be  the  last 
word  because  of  these  serious  obstacles. 

FUTURE  prospects  are  good — if  we  are  at  al!  to  judge 
by  the  steady  progress  of  the  last  ten  years.  Experi- 
ence, education,  superior  types  of  organizations  are 
beginning  to  tell  as  never  before.  More  managers  are  avail- 
able. There  is  more  trained  help  from  the  colleges  and  depart- 
ments of  agriculture.  Some  city  bankers,  financiers  and 
business  men  look  hopefully  to  this  co-operative  movement. 
The  large  packers  have  for  years  dealt  successfully  with  co- 
operatives and  the  millers  too  are  not  fighting  the  type  of 
organizations  which  sell  them  grain.  More  visible  results 
are  at  hand.  Farmers  can  see  in  cold  figures  that  their  new 
organizations  have  helped  them  more  than  have  the  private 
dealers.  This  is  especially  true  since  1920.  Some  opponents 
of  co-operation  have  ceased  fighting,  since  they  have  seen 
what  has  happened  in  North  Dakota.  In  some  neighboring 
western  states,  the  opponents  of  the  farmers'  efforts  see  co- 
operation as  a  less  evil  than  the  Non-Partisan  League.  In 
Minnesota  it  is  claimed  the  League  is  failing  of  farmers' 
support  because  they  are  getting  satisfactory  results  through 
their  co-operatives.  When  the  national  Grain  Dealers'  As- 
sociation was  organizing  to  fight  co-operative  grain  market- 
ing, the  representatives  of  the  grain  exchanges  of  Minne- 
apolis and  Duluth,  Minnesota,  opposed  this.  They  asked  for 
a  "campaign  of  education"  in  regard  to  the  operations  of 
grain  exchanges.  Now  the  most  recent  report  is  that  Minne- 
apolis will  be  no  party  to  a  "war  fund"  to  fight  farmers'  co- 
operatives. And  in  North  Dakota,  as  one  non-agricultural 
journal  has  pointed  out,  if  the  league  be  driven  out  of  the 
door  of  the  arena,  that  is  no  defeat.  The  co-operator  is  en- 
tering by  the  window.  One  conservative  agricultural  jour- 
nal has  warned  that  if  the  plans  of  the  co-operatives  are  un- 
justly fought,  the  farmers  will  be  back  in  the  arena  under 
more  radical  leadership  than  ever  before. 

IT  is  hard  to  forecast  the  extent  or  the  consequences  of 
this  agrarian  co-operative  movement.  There  may  be 
truth  in  the  prediction  that  this  peaceful  agricultural 
revolution  now  going  on  in  American  agriculture  will  bring 
results  as  far-reaching  as  those  of  the  industrial  revolution 
which  began  in  England  in  the  latter  part  of  the  eighteenth 
century  and  inaugurated  our  present  economic  life. 

We  may  now  be  in  the  midst  of  only  the  beginning  of  the 
farmers'  co-operative  movement.  The  progress  of  very  re- 
cent events  continues  good.  The  news  of  the  past  few 
months,  does  it  not  compare  well  with  that  of  the  past  and 
promise  much  for  the  future?  In  South  Dakota  forty  local 
potato  growers'  associations  with  two  thousand  members 
federated  in  the  Potato  Growers'  Co-operative  Ex- 
change to  handle  the  1921  crop.  Ninety  per  cent 
of  the  cabbage  growers  in  Colorado  enlisted  in  the 
Co-operative  Farmers'  Exchange,  Inc.,  which  will 
be  adequately  financed  and  prepared  to  sell  this 
year's  production.  In  California  the  Fruit  Grow- 
ers' Exchange  marketed  the  largest  volume  of 
fruit  ever  grown,  in  the  face  of  a  thirty-three  and 
a  third  per  cent  rise  in  freight  rates  which  went 
into  effect  August,  1920.  The  Walnut  Growers' 
Exchange  disposed  of  53,000,000  pounds  of  walnuts 
with  gross  value  of  $11,000,000  at  a  profit  to  the 
growers.  The  California  Grape  Growers  also  con- 
tinue in  especial  prosperity.  The  Prune  and  Apri- 
cot Growers  have  secured  a  government  export 
loan.  The  Wheat  Growers'  Association  of  Wash- 
ington, Idaho,  Oregon  and  Montana,  with  13,500,- 
000  bushels  of  wheat  to  dispose  of,  borrowed  the 
sum  of  $10,000,000  from  the  War  Finance  Cor- 
poration to  aid  exporting.  The  War  Finance  Cor- 
poration has  loaned  a  total  of  $63,000,000  to 
farmers'  co-operatives.  Says  Aaron  Sapiro,  legal 
counsel  of  fifty  farmers'  co-operative  marketing 
associations,  on  announcing  these  loans:  "The  evi- 
dence of  business  acumen,  commercial  stability  and 
all-around  efficiency  shown  by  the  co-operative  as- 
sociations has  brought  with  it  the  recognition  of 
men  and  governments  and  has  made  possible  these 
huge  financial  transactions."  The  large  North 
American  Fruit  Exchange  of  New  York  was  mu- 
tualized  August  1,  1921, — perhaps  a  step 
toward  a  co-operative  organization.  The 
Exchange      is      a      national      sales      agency    of 


16 


Pacemakers   in   Farmers'   Co-operation 


It  may  be  a  shorter  step  than  some  of  us  think  from  the  boys'  com  or  calf  club  to  the  co-operative  grain 

elevator  or  livestock  shipping  association 


growers'  associations,  and  in  1920  sold  30,000  carloads  of 
fruit  and  vegetables  valued  at  $40,000,000.  The  profits  are 
to  be  limited  to  ten  per  cent  of  the  capital  stock,  and  net 
earnings  above  ten  per  cent  will  be  divided  equally  among 
the  exchange  and  the  growers'  associations  it  represents, 
the  latter  to  be  reimbursed  according  to  the  amount  of  fee 
paid  for  the  service  of  the  exchange.  The  Long  Island  Duck 
Association  which  started  the  Farmers'  Commission  House, 
Inc.,  in  1914  expects  to  sell  this  year  1,100,000  ducklings, 
the  largest  number  it  has  ever  handled.  The  American  Farm 
Bureau  Federation  followed  up  its  co-operative  dairy  market- 
ing conference  by  appointing  a  committee  of  eleven  men  to 
study  the  marketing  of  dairy  products. 

One  hundred  and  fifty  thousand  southern  tobacco,  cotton 
and  peanut  growers  have  signed  co-operative  contracts;  or- 
ganizations have  been  perfected  by  six  hundred  potato  grow- 
ers, five  hundred  poultrymen,  and  by  representative  peach 
growers  in  New  Jersey.  One  of  the  first  rewards  of  the 
Poultry  Association  is  a  special  price  upon  fresh  eggs  under 
its  brand  in  the  New  York  market.  In  New  York  the  newly- 
organized  Empire  State  Potato  Growers'  Co-operative  Asso- 
ciation expects  to  do  a  business  of  $1,000,000  at  the  close  of 
the  first  year.  The  California  Prune  Growers'  seven-year 
contract  expired  in  1921  and  was  promptly  renewed  by  ninety 
per  cent  of  the  prune  growers  of  the  state.  In  1921  farm 
bureaus  in  twenty-one  states  pooled  their  wool  clip.  This 
was  twice  the  number  of  states  in  the  wool  pool  of  1920.  Also 
the  amount  of  wool  thus  sold  increased  from  14,750,000 
pounds  to  27,093,466  in  1921. 

Farmers'  and  city  consumer  co-operatives  may  be  able  to 
get  close  together.  The  city  organization  handles  a  variety 
of  products,  though  it  could  probably  buy  some  necessities 
from  the  farmers'  organizations.  There  are  several  examples 
of  co-operation  between  dairymen  surrounding  cities  and  the 
city  consumer,  which  have  resulted  with  benefit  to  both.  Al- 
ready a  very  sigfnificant  move  has  been  made  in  the  city  of 
New  York.  Fifty  large  restaurants  have  united  in  a  pur- 
chasing association  to  buy  their  food  direct  from  the  farm. 


Farmer-labor  co-operation  is  a  possibility.  Possibly  the  wall 
of  prejudice  existing  between  the  two  groups  may  be  broken 
down,  and  the  farmer  may  sell  products  to  the  labor  union 
or  the  co-operative  of  the  union. 

TO  keep  their  organizations  truly  democratic  and  co- 
operative, to  become  indispensable  in  national  service, 
are  some  of  the  big  opportunities  before  the  farmers' 
organizations.  To  remedy  the  distribution  system,  they  have 
carried  on  a  campaign  of  getting  for  themselves  the  profits 
which  used  to  be  taken  by  others.  They  may  be  doing  a  great 
service  by  building  up  their  own  middlemen,  but  they  may  do 
great  harm  if  their  middlemen  become  as  burdensome  as 
they  claim  those  they  have  displaced  have  been.  Thus  far, 
however,  it  may  be  said  that  they  have  succeeded.  They 
have  measured  up  well.  Mr.  Bernard  M.  Baruch,  a  "city 
man"  thoroughly  familiar  with  the  plans  of  the  farmers' 
organizations,  in  an  article  on  "Some  Aspects  of  the  Farmers' 
Problems"  in  the  Atlantic  Monthly  for  July,  1921,  admir- 
ably sums  up  this  whole  matter.  While  giving  his  belief 
that  "agriculture  suffers  from  preoccupation  and  neglect 
(of  bankers,  financiers  and  industrial  leaders)  rather  than 
from  any  purposeful  exploitation  by  them,  and  that  they 
ought  now  to  begin  to  respond  to  the  farmers'  difficulties, 
which  they  must  realize  are  their  own,"  he  also  states  em- 
phatically: "On  the  other  hand,  my  contacts  with  the  farm- 
ers have  filled  me  with  respect  for  them — for  their  sanity, 
their  patience,  their  balance.  Within  the  last  year — and 
particularly  at  a  meeting  called  by  the  Kansas  State  Board 
of  Agriculture  and  at  another  called  by  the  Committee  of 
Seventeen — I  have  met  many  of  the  leaders  of  the  new  farm 
movement,  and  I  testify,  in  all  sincerity,  that  they  are  en- 
deavoring to  deal  with  their  problems,  not  as  promoters 
of  a  narrow  class  interest,  not  as  exploiters  of  the  hapless 
consumer,  not  as  merciless  monopolists,  but  as  honest  men 
bent  on  the  improvement  of  the  common  weal. 

"We  can  and  must  meet  such  men  and  their  cause  half- 
way.   Their  business  is  our  business — the  nation's  business." 


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